Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2021, 22065-22099 [2020-08359]

Agencies

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

[Federal Register Volume 85, Number 77 (Tuesday, April 21, 2020)]
[Proposed Rules]
[Pages 22065-22099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08359]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1729-P]
RIN 0938-AU05


Medicare Program; Inpatient Rehabilitation Facility Prospective 
Payment System for Federal Fiscal Year 2021

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) 2021. As required by statute, this proposed rule includes the 
classification and weighting factors for the IRF prospective payment 
system's case-mix groups and a description of the methodologies and 
data used in computing the prospective payment rates for FY 2021. We 
are proposing to adopt the most recent Office of Management and Budget 
statistical area delineations and apply a 5 percent cap on any wage 
index decreases compared to FY 2020 in a budget neutral manner. We are 
also proposing to amend the IRF coverage requirements to remove the 
post-admission physician evaluation requirement and codify existing 
documentation instructions and guidance. Additionally, we are proposing 
to amend the IRF coverage requirements to allow non-physician 
practitioners to perform certain requirements that are currently 
required to be performed by a rehabilitation physician.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on June 15, 2020.

ADDRESSES: In commenting, please refer to file code CMS-1729-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three 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-1729-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-1729-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    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.
    Catie Cooksey, (410) 786-0179, for information about the IRF 
payment policies and payment rates.
    Kadie Derby, (410) 786-0468, for information about the IRF coverage 
policies.

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SUPPLEMENTARY INFORMATION: 
    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 as soon as possible 
after they have been received at https://www.regulations.gov. Follow the 
search instructions on that website to view public comments.

Availability of Certain Information Through the Internet on the CMS 
website

    The IRF PPS Addenda along with other supporting documents and 
tables referenced in this proposed rule are available through the 
internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.
    We note that in previous years, each rule or notice issued under 
the IRF PPS has included a detailed reiteration of the various 
regulatory provisions that have affected the IRF PPS over the years. 
That discussion, along with detailed background information for various 
other aspects of the IRF PPS, is now available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

I. Executive Summary

A. Purpose

    This proposed rule would update the prospective payment rates for 
IRFs for FY 2021 (that is, for discharges occurring on or after October 
1, 2020, and on or before September 30, 2021) as required under section 
1886(j)(3)(C) of the Social Security Act (the Act). As required by 
section 1886(j)(5) of the Act, this proposed rule includes the 
classification and weighting factors for the IRF PPS's case-mix groups 
(CMGs) and a description of the methodologies and data used in 
computing the prospective payment rates for FY 2021. We are proposing 
to adopt the most recent Office of Management and Budget (OMB) 
statistical area delineations and apply a 5 percent cap on any wage 
index decreases compared to FY 2020 in a budget neutral manner. We are 
also proposing to amend the IRF coverage requirements to remove the 
post-admission physician evaluation requirement and codify existing 
documentation instructions and guidance. Additionally, we are proposing 
to amend the IRF coverage requirements to allow non-physician 
practitioners to perform certain requirements that are currently 
required be performed by a rehabilitation physician. There are no 
proposals or updates in this proposed rule to the IRF Quality Reporting 
Program (QRP).

B. Summary of Major Provisions

    In this proposed rule, we use the methods described in the FY 2020 
IRF PPS final rule (84 FR 39054) to update the prospective payment 
rates for FY 2021 using updated FY 2019 IRF claims and the most recent 
available IRF cost report data, which is FY 2018 IRF cost report data. 
We are proposing to adopt the most recent OMB statistical area 
delineations and apply a 5 percent cap on any wage index decreases 
compared to FY 2020 in a budget neutral manner. We are also proposing 
to amend the IRF coverage requirements to remove the post-admission 
physician evaluation requirement and codify existing documentation 
instructions and guidance. Additionally, we are proposing to amend the 
IRF coverage requirements to allow non-physician practitioners to 
perform certain requirements that are currently required to be 
performed by a rehabilitation physician.

C. Summary of Impact

                        Table 1--Cost and Benefit
------------------------------------------------------------------------
         Provision description                      Transfers
------------------------------------------------------------------------
FY 2021 IRF PPS payment rate update....  The overall economic impact of
                                          this proposed rule is an
                                          estimated $270 million in
                                          increased payments from the
                                          Federal Government to IRFs
                                          during FY 2021.
------------------------------------------------------------------------

II. Background

A. Statutory Basis and Scope

    Section 1886(j) of the Act provides for the implementation of a 
per-discharge PPS for inpatient rehabilitation hospitals and inpatient 
rehabilitation units of a hospital (collectively, hereinafter referred 
to as IRFs). Payments under the IRF PPS encompass inpatient operating 
and capital costs of furnishing covered rehabilitation services (that 
is, routine, ancillary, and capital costs), but not direct graduate 
medical education costs, costs of approved nursing and allied health 
education activities, bad debts, and other services or items outside 
the scope of the IRF PPS. A complete discussion of the IRF PPS 
provisions appears in the original FY 2002 IRF PPS final rule (66 FR 
41316) and the FY 2006 IRF PPS final rule (70 FR 47880), and we 
provided a general description of the IRF PPS for FYs 2007 through 2019 
in the FY 2020 IRF PPS final rule (84 FR 39055 through 39057).
    Under the IRF PPS from FY 2002 through FY 2005, the prospective 
payment rates were computed across 100 distinct CMGs, as described in 
the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs 
using rehabilitation impairment categories (RICs), functional status 
(both motor and cognitive), and age (in some cases, cognitive status 
and age may not be a factor in defining a CMG). In addition, we 
constructed five special CMGs to account for very short stays and for 
patients who expire in the IRF.
    For each of the CMGs, we developed relative weighting factors to 
account for a patient's clinical characteristics and expected resource 
needs. Thus, the weighting factors accounted for the relative 
difference in resource use across all CMGs. Within each CMG, we created 
tiers based on the estimated effects that certain comorbidities would 
have on resource use.
    We established the Federal PPS rates using a standardized payment 
conversion factor (formerly referred to as the budget-neutral 
conversion factor). For a detailed discussion of the budget-neutral 
conversion factor, please refer to our FY 2004 IRF PPS final rule (68 
FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 
47880), we discussed in detail the methodology for determining the 
standard payment conversion factor.
    We applied the relative weighting factors to the standard payment 
conversion factor to compute the unadjusted prospective payment rates 
under the IRF PPS from FYs 2002 through 2005. Within the structure of 
the payment system, we then made adjustments to account for interrupted 
stays, transfers, short stays, and deaths. Finally, we applied the 
applicable adjustments to account for geographic variations in wages 
(wage index), the percentage of low-income patients, location in a 
rural area (if applicable), and outlier payments (if applicable) to the 
IRFs' unadjusted prospective payment rates.
    For cost reporting periods that began on or after January 1, 2002, 
and before October 1, 2002, we determined the final prospective payment 
amounts using the transition methodology prescribed in section 
1886(j)(1) of the Act. Under this provision, IRFs transitioning into 
the PPS were paid a blend of the Federal IRF PPS rate and the payment 
that the IRFs would have received had the IRF PPS not been implemented. 
This provision also

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allowed IRFs to elect to bypass this blended payment and immediately be 
paid 100 percent of the Federal IRF PPS rate. The transition 
methodology expired as of cost reporting periods beginning on or after 
October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 
percent of the Federal IRF PPS rate.
    Section 1886(j) of the Act confers broad statutory authority upon 
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF 
PPS final rule (70 FR 47880) and in correcting amendments to the FY 
2006 IRF PPS final rule (70 FR 57166), we finalized a number of 
refinements to the IRF PPS case-mix classification system (the CMGs and 
the corresponding relative weights) and the case-level and facility-
level adjustments. These refinements included the adoption of the OMB's 
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; rebasing and revising 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 was a 
market basket reflecting the operating and capital cost structures for 
freestanding IRFs, freestanding inpatient psychiatric facilities 
(IPFs), and long-term care hospitals (LTCHs) (hereinafter 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.
    The regulatory history previously included in each rule or notice 
issued under the IRF PPS is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index?redirect=/InpatientRehabFac PPS/.

B. Provisions of the PPACA Affecting the IRF PPS in FY 2012 and Beyond

    The Patient Protection and Affordable Care Act (PPACA) (Pub. L. 
111-148) was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the PPACA, was enacted on March 30, 2010. In this 
proposed rule, we refer to the two statutes collectively as the 
``Patient Protection and Affordable Care Act'' or ``PPACA''.
    The PPACA included several provisions that affect the IRF PPS in 
FYs 2012 and beyond. In addition to what was previously discussed, 
section 3401(d) of the PPACA also added section 1886(j)(3)(C)(ii)(I) of 
the Act (providing for a ``productivity adjustment'' for fiscal year 
(FY) 2012 and each subsequent FY). The productivity adjustment for FY 
2021 is discussed in section V.B. of this proposed rule. Section 
1886(j)(3)(C)(ii)(II) of the Act provides that the application of the 
productivity adjustment to the market basket update may result in an 
update that is less than 0.0 for a FY and in payment rates for a FY 
being less than such payment rates for the preceding FY.
    Sections 3004(b) of the PPACA and section 411(b) of the Medicare 
Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted 
April 16, 2015) (MACRA) also addressed the IRF PPS. Section 3004(b) of 
PPACA reassigned the previously designated section 1886(j)(7) of the 
Act to section 1886(j)(8) of the Act and inserted a new section 
1886(j)(7) of the Act, which contains requirements for the Secretary to 
establish a quality reporting program (QRP) for IRFs. Under that 
program, data must be submitted in a form and manner and at a time 
specified by the Secretary. Beginning in FY 2014, section 
1886(j)(7)(A)(i) of the Act requires the application of a 2 percentage 
point reduction to the market basket increase factor otherwise 
applicable to an IRF (after application of paragraphs (C)(iii) and (D) 
of section 1886(j)(3) of the Act) for a FY if the IRF does not comply 
with the requirements of the IRF QRP for that FY. Application of the 2 
percentage point reduction may result in an update that is less than 
0.0 for a FY and in payment rates for a FY being less than such payment 
rates for the preceding FY. Reporting-based reductions to the market 
basket increase factor are not cumulative; they only apply for the FY 
involved. Section 411(b) of the MACRA amended section 1886(j)(3)(C) of 
the Act by adding paragraph (iii), which required us to apply for FY 
2018, after the application of section 1886(j)(3)(C)(ii) of the Act, an 
increase factor of 1.0 percent to update the IRF prospective payment 
rates.

C. Operational Overview of the Current IRF PPS

    As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon 
the admission and discharge of a Medicare Part A fee-for-service (FFS) 
patient, the IRF is required to complete the appropriate sections of a 
Patient Assessment Instrument (PAI), designated as the IRF-PAI. In 
addition, beginning with IRF discharges occurring on or after October 
1, 2009, the IRF is also required to complete the appropriate sections 
of the IRF-PAI upon the admission and discharge of each Medicare 
Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule 
(74 FR 39762 and 74 FR 50712). All required data must be electronically 
encoded into the IRF-PAI software product. Generally, the software 
product includes patient classification programming called the Grouper 
software. The Grouper software uses specific IRF-PAI data elements to 
classify (or group) patients into distinct CMGs and account for the 
existence of any relevant comorbidities.
    The Grouper software produces a five-character CMG number. The 
first character is an alphabetic character that indicates the 
comorbidity tier. The last four characters are numeric characters that 
represent the distinct CMG number. A free download of the Grouper 
software is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html. The Grouper software is also embedded in the iQIES User 
tool available in iQIES at https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies.
    Once a Medicare Part A FFS patient is discharged, the IRF submits a 
Medicare claim as a Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) (Pub. L. 104-191, enacted August 21, 1996) -compliant 
electronic claim or, if the Administrative Simplification Compliance 
Act of 2002 (ASCA) (Pub. L. 107-105, enacted December 27, 2002) 
permits, a paper claim (a UB-04 or a CMS-1450 as appropriate) using the 
five-character CMG number and sends it to the appropriate Medicare 
Administrative Contractor (MAC). In addition, once a MA patient is 
discharged, in accordance with the Medicare Claims Processing Manual, 
chapter 3, section 20.3 (Pub. 100-04), hospitals (including IRFs) must 
submit an informational-only bill (type of bill (TOB) 111), which 
includes Condition Code 04 to their MAC. This will ensure that the MA 
days are included in the hospital's Supplemental Security Income (SSI) 
ratio (used in calculating the IRF LIP adjustment) for FY 2007 and 
beyond. Claims submitted to Medicare must comply with both ASCA and 
HIPAA.
    Section 3 of the ASCA amended section 1862(a) of the Act by adding

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paragraph (22), which requires the Medicare program, subject to section 
1862(h) of the Act, to deny payment under Part A or Part B for any 
expenses for items or services for which a claim is submitted other 
than in an electronic form specified by the Secretary. Section 1862(h) 
of the Act, in turn, provides that the Secretary shall waive such 
denial in situations in which there is no method available for the 
submission of claims in an electronic form or the entity submitting the 
claim is a small provider. In addition, the Secretary also has the 
authority to waive such denial in such unusual cases as the Secretary 
finds appropriate. For more information, see the ``Medicare Program; 
Electronic Submission of Medicare Claims'' final rule (70 FR 71008). 
Our instructions for the limited number of Medicare claims submitted on 
paper are available at https://www.cms.gov/manuals/downloads/clm104c25.pdf.
    Section 3 of the ASCA operates in the context of the administrative 
simplification provisions of HIPAA, which include, among others, the 
requirements for transaction standards and code sets codified in 45 CFR 
part 160 and part 162, subparts A and I through R (generally known as 
the Transactions Rule). The Transactions Rule requires covered 
entities, including covered health care providers, to conduct covered 
electronic transactions according to the applicable transaction 
standards. (See the CMS program claim memoranda at https://www.cms.gov/ElectronicBillingEDITrans/ and listed in the addenda to the Medicare 
Intermediary Manual, Part 3, section 3600).
    The MAC processes the claim through its software system. This 
software system includes pricing programming called the ``Pricer'' 
software. The Pricer software uses the CMG number, along with other 
specific claim data elements and provider-specific data, to adjust the 
IRF's prospective payment for interrupted stays, transfers, short 
stays, and deaths, and then applies the applicable adjustments to 
account for the IRF's wage index, percentage of low-income patients, 
rural location, and outlier payments. For discharges occurring on or 
after October 1, 2005, the IRF PPS payment also reflects the teaching 
status adjustment that became effective as of FY 2006, as discussed in 
the FY 2006 IRF PPS final rule (70 FR 47880).

D. Advancing Health Information Exchange

    The Department of Health and Human Services (HHS) has a number of 
initiatives designed to encourage and support the adoption of 
interoperable health information technology and to promote nationwide 
health information exchange to improve health care and patient access 
to their health information. The Office of the National Coordinator for 
Health Information Technology (ONC) and CMS work collaboratively to 
advance interoperability across settings of care, including post-acute 
care.
    To further interoperability in post-acute care settings, CMS 
continues to explore opportunities to advance electronic exchange of 
patient information across payers, providers and with patients, 
including developing systems that use nationally recognized health IT 
standards such as the Logical Observation Identifiers Names and Codes 
(LOINC), the Systematized Nomenclature of Medicine (SNOMED), and the 
Fast Healthcare Interoperability Resources (FHIR). In addition, CMS and 
ONC established the Post-Acute Care Interoperability Workgroup (PACIO) 
to facilitate collaboration with industry stakeholders to develop FHIR 
standards that could support the exchange and reuse of patient 
assessment data derived from the minimum data set (MDS), inpatient 
rehabilitation facility patient assessment instrument (IRF-PAI), long 
term care hospital continuity assessment record and evaluation (LCDS), 
outcome and assessment information set (OASIS) and other sources.
    The Data Element Library (DEL) continues to be updated and serves 
as the authoritative resource for PAC assessment data elements and 
their associated mappings to health IT standards. The DEL furthers CMS' 
goal of data standardization and interoperability. These interoperable 
data elements can reduce provider burden by allowing the use and 
exchange of healthcare data, support provider exchange of electronic 
health information for care coordination, person-centered care, and 
support real-time, data driven, clinical decision making. Standards in 
the Data Element Library (https://del.cms.gov/DELWeb/pubHome) can be 
referenced on the CMS website and in the ONC Interoperability Standards 
Advisory (ISA). The 2020 ISA is available at https://www.healthit.gov/isa.
    In the September 30, 2019 Federal Register, CMS published a final 
rule, ``Medicare and Medicaid Programs; Revisions to Requirements for 
Discharge Planning'' (84 FR 51836) (``Discharge Planning final rule''), 
that revises the discharge planning requirements that hospitals 
(including psychiatric hospitals, long-term care hospitals, and 
inpatient rehabilitation facilities), critical access hospitals (CAHs), 
and home health agencies, must meet to participate in Medicare and 
Medicaid programs. The rule supports CMS' interoperability efforts by 
promoting the exchange of patient information between health care 
settings, and by ensuring that a patient's necessary medical 
information is transferred with the patient after discharge from a 
hospital, CAH, or post-acute care services provider. For more 
information on the Discharge planning requirements, please visit the 
final rule at https://www.federalregister.gov/documents/2019/09/30/2019-20732/medicare-and-medicaid-programs-revisions-to-requirements-for-discharge-planning-for-hospitals.

III. Summary of Provisions of the Proposed Rule

    The proposed policy changes and updates to the IRF prospective 
payment rates for FY 2021 are as follows:
     Update the CMG relative weights and average length of stay 
values for FY 2021, in a budget neutral manner, as discussed in section 
IV. of this proposed rule.
     Update the IRF PPS payment rates for FY 2021 by the 
proposed market basket increase factor, based upon the most current 
data available, with a proposed productivity adjustment required by 
section 1886(j)(3)(C)(ii)(I) of the Act, as described in section V. of 
this proposed rule.
     Describe the proposed adoption of the revised OMB 
delineations, the proposed IRF wage index transition, and the proposed 
update to the labor-related share for FY 2021 in a budget-neutral 
manner, as described in section V. of this proposed rule.
     Describe the calculation of the IRF standard payment 
conversion factor for FY 2021, as discussed in section V. of this 
proposed rule.
     Update the outlier threshold amount for FY 2021, as 
discussed in section VI. of this proposed rule.
     Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2021, as discussed in section VI. of this 
proposed rule.
     Amend the IRF coverage requirements to remove the post-
admission physician evaluation requirement as discussed in section VII. 
of this proposed rule.
     Amend the IRF coverage requirements to codify existing 
documentation instructions and guidance as discussed in section VIII. 
of this proposed rule.
     Amend the IRF coverage requirements to allow non-physician

[[Page 22069]]

practitioners to perform certain requirements that are currently 
required to be performed by a rehabilitation physician as discussed in 
section IX. of this proposed rule.
     Describe the method for applying the reduction to the FY 
2021 IRF increase factor for IRFs that fail to meet the quality 
reporting requirements as discussed in section X. of this proposed 
rule.

IV. Proposed Update to the Case-Mix Group (CMG) Relative Weights and 
Average Length of Stay Values for FY 2021

    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 2021. 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 2021, we propose 
to use the FY 2019 IRF claims and FY 2018 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 2019 IRF cost report data are 
available for analysis, but the majority of the FY 2019 IRF claims data 
are available for analysis. We are also proposing that if more recent 
data become available after the publication of this proposed rule and 
before the publication of the final rule, we would use such data to 
determine the FY 2021 CMG relative weights and average length of stay 
values in the final rule.
    We are proposing to apply these data using the same methodologies 
that we have used to update the CMG relative weights and average length 
of stay values each FY since we implemented an update to the 
methodology to use the more detailed CCR data from the cost reports of 
IRF provider units of primary acute care hospitals, instead of CCR data 
from the associated primary care hospitals, to calculate IRFs' average 
costs per case, as discussed in the FY 2009 IRF PPS final rule (73 FR 
46372). In calculating the CMG relative weights, we use a hospital-
specific relative value method to estimate operating (routine and 
ancillary services) and capital costs of IRFs. The process 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 2021 CMG relative weights to the same 
average CMG relative weight from the CMG relative weights implemented 
in the FY 2020 IRF PPS final rule (84 FR 39054).
    Consistent with the methodology that we have used to update the IRF 
classification system in each instance in the past, we propose to 
update the CMG relative weights for FY 2021 in such a way that total 
estimated aggregate payments to IRFs for FY 2021 are the same with or 
without the changes (that is, in a budget-neutral manner) by applying a 
budget neutrality factor to the standard payment amount. To calculate 
the appropriate budget neutrality factor for use in updating the FY 
2021 CMG relative weights, we use the following steps:
    Step 1. Calculate the estimated total amount of IRF PPS payments 
for FY 2021 (with no changes to the CMG relative weights).
    Step 2. Calculate the estimated total amount of IRF PPS payments 
for FY 2021 by applying the proposed changes to the CMG relative 
weights (as discussed in this proposed rule).
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2 to determine the budget neutrality factor of 
0.9969 that would maintain the same total estimated aggregate payments 
in FY 2021 with and without the proposed changes to the CMG relative 
weights.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2021 IRF PPS standard payment amount after the application of the 
budget-neutral wage adjustment factor.
    In section V.D. of this proposed rule, we discuss the proposed use 
of the existing methodology to calculate the proposed standard payment 
conversion factor for FY 2021.
    In Table 2, ``Proposed Relative Weights and Average Length of Stay 
Values for Case-Mix Groups,'' we present the CMGs, the comorbidity 
tiers, the corresponding relative weights, and the average length of 
stay values for each CMG and tier for FY 2021. 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.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
    Generally, updates to the CMG relative weights result in some 
increases and some decreases to the CMG relative weight values. Table 3 
shows how we estimate that the application of the proposed revisions 
for FY 2021 would affect particular CMG relative weight values, which 
would affect the overall distribution of payments within CMGs and 
tiers. We note that, because we propose to implement the CMG relative 
weight revisions in a budget-neutral manner (as previously described), 
total estimated aggregate payments to IRFs for FY 2021 would not be 
affected as a result of the proposed CMG relative weight revisions. 
However, the proposed revisions would affect the distribution of 
payments within CMGs and tiers.

   Table 3--Distributional Effects of the Changes to the CMG Relative
                                 Weights
------------------------------------------------------------------------
 Percentage change in CMG relative   Number of cases     Percentage of
              weights                    affected        cases affected
------------------------------------------------------------------------
Increased by 15% or more..........                 64                0.0
Increased by between 5% and 15%...              1,678                0.4
Changed by less than 5%...........            401,521               99.3
Decreased by between 5% and 15%...                936                0.2
Decreased by 15% or more..........                 11                0.0
------------------------------------------------------------------------

    As shown in Table 3, 99.3 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 2021. The proposed changes in the average 
length of stay values for FY 2021, compared with the FY 2020 average 
length of stay values, are small and do not show any particular trends 
in IRF length of stay patterns.
    We invite public comment on our proposed updates to the CMG 
relative weights and average length of stay values for FY 2021.

V. Proposed FY 2021 IRF PPS Payment Update

A. Background

    Section 1886(j)(3)(C) of the Act requires the Secretary to 
establish an increase factor that reflects changes over time in the 
prices of an appropriate mix of goods and services for which payment is 
made under the IRF PPS. According to section 1886(j)(3)(A)(i) of the 
Act, the increase factor shall be used to update the IRF prospective 
payment rates for each FY. Section 1886(j)(3)(C)(ii)(I) of the Act 
requires the application of the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act. Thus, we propose to update 
the IRF PPS payments for FY 2021 by a market basket increase factor as 
required by section 1886(j)(3)(C) of the Act based upon the most 
current data available, with a productivity adjustment as required by 
section 1886(j)(3)(C)(ii)(I) of the Act.
    We have utilized various market baskets through the years in the 
IRF PPS. For a discussion of these market baskets, we refer readers to 
the FY 2016 IRF PPS final rule (80 FR 47046).
    In FY 2016, we finalized the use of a 2012-based IRF market basket, 
using Medicare cost report (MCR) data for both freestanding and 
hospital-based

[[Page 22074]]

IRFs (80 FR 47049 through 47068). Beginning with FY 2020, we finalized 
a rebased and revised IRF market basket to reflect a 2016 base year. 
The FY 2020 IRF PPS final rule (84 FR 39071 through 39086) contains a 
complete discussion of the development of the 2016-based IRF market 
basket.

B. Proposed FY 2021 Market Basket Update and Productivity Adjustment

    For FY 2021 (that is, beginning October 1, 2020 and ending 
September 30, 2021), we propose to update the IRF PPS payments by a 
market basket increase factor as required by section 1886(j)(3)(C) of 
the Act, with a productivity adjustment as required by section 
1886(j)(3)(C)(ii)(I) of the Act. For FY 2021, we propose to use the 
same methodology described in the FY 2020 IRF PPS final rule (84 FR 
39085) to compute the FY 2021 market basket increase factor to update 
the IRF PPS base payment rate.
    Consistent with historical practice, we are proposing to estimate 
the market basket update for the IRF PPS based on IHS Global Inc.'s 
(IGI's) forecast using the most recent available data. IGI is a 
nationally-recognized economic and financial forecasting firm with 
which we contract to forecast the components of the market baskets and 
multifactor productivity (MFP). Based on IGI's fourth quarter 2019 
forecast with historical data through the third quarter of 2019, the 
2016-based IRF market basket increase factor for FY 2021 is projected 
to be 2.9 percent. Therefore, we are proposing that the 2016-based IRF 
market basket increase factor for FY 2021 would be 2.9 percent. We are 
also proposing that if more recent data become available after the 
publication of this proposed rule and before the publication of the 
final rule (for example, a more recent estimate of the market basket 
update), we would use such data to determine the FY 2021 market basket 
update in the final rule.
    According to section 1886(j)(3)(C)(i) of the Act, the Secretary 
shall establish an increase factor based on an appropriate percentage 
increase in a market basket of goods and services. Section 
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the 
increase factor for a FY, the Secretary shall reduce such increase 
factor for FY 2012 and each subsequent FY, by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. 
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of 
this productivity adjustment. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide, private nonfarm business MFP (as projected by the 
Secretary for the 10-year period ending with the applicable FY, year, 
cost reporting period, or other annual period) (the ``MFP 
adjustment''). The U.S. Department of Labor's Bureau of Labor 
Statistics (BLS) publishes the official measure of private nonfarm 
business MFP. Please see https://www.bls.gov/mfp for the BLS historical 
published MFP data. A complete description of the MFP projection 
methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/MedicareProgramRatesStats/MarketBasketResearch.html.
    Using IGI's fourth quarter 2019 forecast, the MFP adjustment for FY 
2021 (the 10-year moving average of MFP for the period ending FY 2021) 
is projected to be 0.4 percent. Thus, in accordance with section 
1886(j)(3)(C) of the Act, we are proposing to base the FY 2021 market 
basket update, which is used to determine the applicable percentage 
increase for the IRF payments, on the 2016-based IRF market basket. We 
are proposing to then reduce this percentage increase by the estimated 
MFP adjustment for FY 2021 of 0.4 percentage point (the 10-year moving 
average of MFP for the period ending FY 2021 based on IGI's fourth 
quarter 2019 forecast). Therefore, the proposed FY 2021 IRF update 
would be 2.5 percent (2.9 percent market basket update, less 0.4 
percentage point MFP adjustment). Furthermore, we are proposing that if 
more recent data become available after the publication of this 
proposed rule and before the publication of the final rule (for 
example, a more recent estimate of the market basket and MFP 
adjustment), we would use such data to determine the FY 2021 market 
basket update and MFP adjustment in the final rule.
    For FY 2021, the Medicare Payment Advisory Commission (MedPAC) 
recommends that we reduce IRF PPS payment rates by 5 percent. As 
discussed, and in accordance with sections 1886(j)(3)(C) and 
1886(j)(3)(D) of the Act, the Secretary is proposing to update the IRF 
PPS payment rates for FY 2021 by an adjusted market basket increase 
factor of 2.5 percent, as 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 2021.
    We invite public comment on the proposed market basket update and 
productivity adjustment.

C. Proposed Labor-Related Share for FY 2021

    Section 1886(j)(6) of the Act specifies that the Secretary is to 
adjust the proportion (as estimated by the Secretary from time to time) 
of IRFs' costs which are attributable to wages and wage-related costs, 
of the prospective payment rates computed under section 1886(j)(3) of 
the Act for area differences in wage levels by a factor (established by 
the Secretary) reflecting the relative hospital wage level in the 
geographic area of the rehabilitation facility compared to the national 
average wage level for such facilities. The labor-related share is 
determined by identifying the national average proportion of total 
costs that are related to, influenced by, or vary with the local labor 
market. We propose to continue to classify a cost category as labor-
related if the costs are labor-intensive and vary with the local labor 
market.
    Based on our definition of the labor-related share and the cost 
categories in the 2016-based IRF market basket, we propose to calculate 
the labor-related share for FY 2021 as the sum of the FY 2021 relative 
importance of Wages and Salaries, Employee Benefits, Professional Fees: 
Labor-related, Administrative and Facilities Support Services, 
Installation, Maintenance, and Repair Services, All Other: Labor-
related Services, and a portion of the Capital-Related relative 
importance from the 2016-based IRF market basket. For more details 
regarding the methodology for determining specific cost categories for 
inclusion in the 2016-based IRF labor-related share, see the FY 2020 
IRF PPS final rule (84 FR 39087 through 39089).
    The relative importance reflects the different rates of price 
change for these cost categories between the base year (2016) and FY 
2021. Based on IGI's fourth quarter 2019 forecast of the 2016-based IRF 
market basket, the sum of the FY 2021 relative importance for Wages and 
Salaries, Employee Benefits, Professional Fees: Labor-related, 
Administrative and Facilities Support Services, Installation 
Maintenance & Repair Services, and All Other: Labor-related Services is 
69.0 percent. We propose that the portion of Capital-Related costs that 
are influenced by the local labor market is 46 percent. Since the 
relative importance for Capital-Related costs is 8.5 percent of the 
2016-based IRF market basket for FY 2021, we propose to take 46 percent 
of 8.5 percent to determine the labor-related share of Capital-Related 
costs for FY 2021 of 3.9 percent. Therefore, we are proposing a total 
labor-related share for FY 2021 of

[[Page 22075]]

72.9 percent (the sum of 69.0 percent for the labor-related share of 
operating costs and 3.9 percent for the labor-related share of Capital-
Related costs). We propose that if more recent data become available 
after publication of this proposed rule and before the publication of 
the final rule (for example, a more recent estimate of the labor-
related share), we will use such data to determine the FY 2021 IRF 
labor-related share in the final rule. Table 4 shows the FY 2021 
proposed labor-related share and the FY 2020 final labor-related share 
using the 2016-based IRF market basket relative importance.

Table 4--FY 2021 IRF Proposed Labor-Related Share and FY 2020 IRF Labor-
                              Related Share
------------------------------------------------------------------------
                                              FY 2021
                                             proposed      FY 2020 final
                                           labor-related   labor-related
                                             share \1\       share \2\
------------------------------------------------------------------------
Wages and Salaries......................            48.4            48.1
Employee Benefits.......................            11.4            11.4
Professional Fees: Labor-Related \3\....             5.0             5.0
Administrative and Facilities Support                0.8             0.8
 Services...............................
Installation, Maintenance, and Repair                1.6             1.6
 Services...............................
                                         -------------------------------
All Other: Labor-Related Services.......             1.8             1.8
    Subtotal............................            69.0            68.7
                                         -------------------------------
Labor-Related portion of Capital-Related             3.9             4.0
 (46%)..................................
                                         -------------------------------
        Total Labor-Related Share.......            72.9            72.7
------------------------------------------------------------------------
\1\ Based on the 2016-based IRF market basket relative importance, IHS
  Global, Inc. 4th quarter 2019 forecast.
\2\ Based on the 2016-based IRF market basket relative importance as
  published in the Federal Register (84 FR 39089).
\3\ Includes all contract advertising and marketing costs and a portion
  of accounting, architectural, engineering, legal, management
  consulting, and home office contract labor costs.

    We invite public comment on the proposed labor-related share for FY 
2021.

D. Proposed Wage Adjustment for FY 2021

1. Background
    Section 1886(j)(6) of the Act requires the Secretary to adjust the 
proportion of rehabilitation facilities' costs attributable to wages 
and wage-related costs (as estimated by the Secretary from time to 
time) by a factor (established by the Secretary) reflecting the 
relative hospital wage level in the geographic area of the 
rehabilitation facility compared to the national average wage level for 
those facilities. The Secretary is required to update the IRF PPS wage 
index on the basis of information available to the Secretary on the 
wages and wage-related costs to furnish rehabilitation services. Any 
adjustment or updates made under section 1886(j)(6) of the Act for a FY 
are made in a budget-neutral manner.
    For FY 2021, we propose to maintain the policies and methodologies 
described in the FY 2020 IRF PPS final rule (84 FR 39090) related to 
the labor market area definitions and the wage index methodology for 
areas with wage data. Thus, we propose to use the CBSA labor market 
area definitions and the FY 2021 pre-reclassification and pre-floor 
hospital wage index data. In accordance with section 1886(d)(3)(E) of 
the Act, the FY 2021 pre-reclassification and pre-floor hospital wage 
index is based on data submitted for hospital cost reporting periods 
beginning on or after October 1, 2016, and before October 1, 2017 (that 
is, FY 2017 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 on which to base the calculation for the FY 2021 IRF 
PPS wage index.
2. Core-Based Statistical Areas (CBSAs) for the FY 2021 IRF Wage Index
a. Background
    The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor inpatient PPS (IPPS) wage index data and 
is assigned to the IRF on the basis of the labor market area in which 
the IRF is geographically located. IRF labor market areas are 
delineated based on the CBSAs established by the OMB. The current CBSA 
delineations (which were implemented for the IRF PPS beginning with FY 
2016) are based on revised OMB delineations issued on February 28, 
2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established 
revised delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas in the United States 
and Puerto Rico based on the 2010 Census, and provided guidance on the 
use of the delineations of these statistical areas using standards 
published in the June 28, 2010 Federal Register (75 FR 37246 through 
37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068 
through 47076) for a full discussion of our implementation of the OMB 
labor market area delineations beginning with the FY 2016 wage index.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB 
occasionally issues minor updates and revisions to statistical areas in 
the years between the decennial censuses. On July 15, 2015, OMB issued 
OMB Bulletin No. 15-01, which provides minor updates to and supersedes 
OMB Bulletin No. 13-01 that was issued on February 28, 2013. The 
attachment to OMB Bulletin No. 15-01 provides detailed information on 
the update to statistical areas since February 28, 2013. The updates 
provided in OMB Bulletin No. 15-01 are based on the application of the 
2010 Standards for Delineating Metropolitan and Micropolitan 
Statistical Areas to Census Bureau population estimates for July 1, 
2012 and July 1, 2013.
    In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we 
adopted the updates set forth in OMB Bulletin

[[Page 22076]]

No. 15-01 effective October 1, 2017, beginning with the FY 2018 IRF 
wage index. For a complete discussion of the adoption of the updates 
set forth in OMB Bulletin No. 15-01, we refer readers to the FY 2018 
IRF PPS final rule. In the FY 2019 IRF PPS final rule (83 FR 38527), we 
continued to use the OMB delineations that were adopted beginning with 
FY 2016 to calculate the area wage indexes, with updates set forth in 
OMB Bulletin No. 15-01 that we adopted beginning with the FY 2018 wage 
index.
    On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which 
provided updates to and superseded OMB Bulletin No. 15-01 that was 
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 
provide detailed information on the update to statistical areas since 
July 15, 2015, and are based on the application of the 2010 Standards 
for Delineating Metropolitan and Micropolitan Statistical Areas to 
Census Bureau population estimates for July 1, 2014 and July 1, 2015. 
In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we 
adopted the updates set forth in OMB Bulletin No. 17-01 effective 
October 1, 2019, beginning with the FY 2020 IRF wage index.
    On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which 
superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September 
14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded the April 
10, 2018 OMB Bulletin No. 18-03. These bulletins established revised 
delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas, and provided 
guidance on the use of the delineations of these statistical areas. A 
copy of the most recent bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. We 
note that on March 6, 2020 OMB issued OMB Bulletin 20-01 (available on 
the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf), which, as discussed later in the proposed rule, 
was not issued in time for development of this proposed rule.
    While OMB Bulletin No. 18-04 is not based on new census data, there 
were some material changes based on the revised OMB delineations. The 
revisions OMB published on September 14, 2018 contain a number of 
significant changes. For example, under the new OMB delineations, there 
would be new CBSAs, urban counties that would become rural, rural 
counties that would become urban, and existing CBSAs that would be 
split apart. We discuss these changes in more detail in section 
V.D.2.b. of this proposed rule. We are proposing to adopt the updates 
to the OMB delineations announced in OMB Bulletin No. 18-04 effective 
beginning with FY 2021 under the IRF PPS. As noted previously in this 
proposed rule, the March 6, 2020 OMB Bulletin 20-01 was not issued in 
time for development of this proposed rule. While we do not believe 
that the minor updates included in OMB Bulletin 20-01 would impact our 
proposed updates to the CBSA-based labor market area delineations, if 
appropriate, we would propose any updates from this bulletin in the FY 
2022 IRF PPS proposed rule.
b. Proposed Implementation of New Labor Market Area Delineations
    We believe it is important for the IRF PPS to use the latest labor 
market area delineations available as soon as is reasonably possible to 
maintain a more accurate and up-to-date payment system that reflects 
the reality of population shifts and labor market conditions. We 
further believe that using the most current delineations will increase 
the integrity of the IRF PPS wage index system by creating a more 
accurate representation of geographic variations in wage levels. 
Therefore, we are proposing to adopt the new OMB delineations as 
described in the September 14, 2018 OMB Bulletin No. 18-04, effective 
beginning with the FY 2021 IRF PPS wage index. We are proposing to use 
these new delineations to calculate area wage indexes in a manner that 
is generally consistent with the CBSA-based methodologies. As the 
adoption of the new OMB delineations may have significant negative 
impacts on the wage index values for certain geographic areas, we also 
are proposing to apply a 5 percent cap on any decrease in an IRF's wage 
index from the IRF's wage index from the prior FY. This proposed 
transition is discussed in more detail in section V.D.3. of this 
proposed rule.
(1) Micropolitan Statistical Areas
    OMB defines a ``Micropolitan Statistical Area'' as a CBSA 
associated with at least one urban cluster that has a population of at 
least 10,000, but less than 50,000 (75 FR 37252). We refer to these 
areas as Micropolitan Areas. Since FY 2006, we have treated 
Micropolitan Areas as rural and include hospitals located in 
Micropolitan Areas in each State's rural wage index. We refer the 
reader to the FY 2006 IRF PPS final rule for a complete discussion 
regarding treating Micropolitan Areas as rural. Therefore, in 
conjunction with our proposal to implement the new OMB labor market 
delineations beginning in FY 2021 and consistent with the treatment of 
Micropolitan Areas under the IPPS, we are proposing to continue to 
treat Micropolitan Areas as ``rural'' and to include Micropolitan Areas 
in the calculation of the state's rural wage index.
(2) Urban Counties That Would Become Rural Under the New OMB 
Delineations
    As previously discussed, we are proposing to implement the new OMB 
labor market area delineations (based upon the 2010 Decennial Census 
data) beginning in FY 2021. Our analysis shows that a total of 34 
counties (and county equivalents) that are currently considered part of 
an urban CBSA would be considered located in a rural area, beginning in 
FY 2021, under these new OMB delineations. Table 5 lists the 34 urban 
counties that would be rural if we finalize our proposal to implement 
the new OMB delineations.

                       Table 5--Counties That Would Transition From Urban to Rural Status
----------------------------------------------------------------------------------------------------------------
                                       County/county                             Current
         FIPS county code               equivalent               State             CBSA       Current CBSA name
----------------------------------------------------------------------------------------------------------------
01127............................  Walker..............  AL                          13820  Birmingham-Hoover,
                                                                                             AL.
12045............................  Gulf................  FL                          37460  Panama City, FL.
13007............................  Baker...............  GA                          10500  Albany, GA.
13235............................  Pulaski.............  GA                          47580  Warner Robins, GA.
15005............................  Kalawao.............  HI                          27980  Kahului-Wailuku-
                                                                                             Lahaina, HI.
17039............................  De Witt.............  IL                          14010  Bloomington, IL.
17053............................  Ford................  IL                          16580  Champaign-Urbana,
                                                                                             IL.
18143............................  Scott...............  IN                          31140  Louisville/Jefferson
                                                                                             County, KY-IN.
18179............................  Wells...............  IN                         23060.  Fort Wayne, IN.
19149............................  Plymouth............  IA                          43580  Sioux City, IA-NE-
                                                                                             SD.

[[Page 22077]]

 
20095............................  Kingman.............  KS                          48620  Wichita, KS.
21223............................  Trimble.............  KY                          31140  Louisville/Jefferson
                                                                                             County, KY-IN.
22119............................  Webster.............  LA                          43340  Shreveport-Bossier
                                                                                             City, LA.
26015............................  Barry...............  MI                          24340  Grand Rapids-
                                                                                             Wyoming, MI.
26159............................  Van Buren...........  MI                          28020  Kalamazoo-Portage,
                                                                                             MI.
27143............................  Sibley..............  MN                          33460  Minneapolis-St. Paul-
                                                                                             Bloomington, MN-WI.
28009............................  Benton..............  MS                          32820  Memphis, TN-MS-AR.
29119............................  Mc Donald...........  MO                          22220  Fayetteville-
                                                                                             Springdale-Rogers,
                                                                                             AR-MO.
30037............................  Golden Valley.......  MT                          13740  Billings, MT.
31081............................  Hamilton............  NE                          24260  Grand Island, NE.
38085............................  Sioux...............  ND                          13900  Bismarck, ND.
40079............................  Le Flore............  OK                          22900  Fort Smith, AR-OK.
45087............................  Union...............  SC                          43900  Spartanburg, SC.
46033............................  Custer..............  SD                          39660  Rapid City, SD.
47081............................  Hickman.............  TN                          34980  Nashville-Davidson-
                                                                                             Murfreesboro-
                                                                                             Franklin, TN.
48007............................  Aransas.............  TX                          18580  Corpus Christi, TX.
48221............................  Hood................  TX                          23104  Fort Worth-
                                                                                             Arlington, TX.
48351............................  Newton..............  TX                          13140  Beaumont-Port
                                                                                             Arthur, TX.
48425............................  Somervell...........  TX                          23104  Fort Worth-
                                                                                             Arlington, TX.
51029............................  Buckingham..........  VA                          16820  Charlottesville, VA.
51033............................  Caroline............  VA                          40060  Richmond, VA.
51063............................  Floyd...............  VA                          13980  Blacksburg-
                                                                                             Christiansburg-
                                                                                             Radford, VA.
53013............................  Columbia............  WA                          47460  Walla Walla, WA.
53051............................  Pend Oreille........  WA                          44060  Spokane-Spokane
                                                                                             Valley, WA.
----------------------------------------------------------------------------------------------------------------

    We are proposing that the wage data for all hospitals located in 
the counties listed above would now be considered rural, beginning in 
FY 2021, when calculating their respective State's rural wage index. 
This rural wage index value would also be used under the IRF PPS. We 
refer readers to section V.D.3. of this proposed rule for a discussion 
of the proposed wage index transition policy due to these proposed 
changes.
(3) Rural Counties That Would Become Urban Under the New OMB 
Delineations
    As previously discussed, we are proposing to implement the new OMB 
labor market area delineations (based upon the 2010 Decennial Census 
data) beginning in FY 2021. Analysis of these OMB labor market area 
delineations shows that a total of 47 counties (and county equivalents) 
that are currently considered located in rural areas would be 
considered located in urban areas under the new OMB delineations. Table 
6 lists the 47 rural counties that would be urban if we finalize our 
proposal to implement the new OMB delineations.

                       Table 6--Counties That Would Transition From Rural to Urban Status
----------------------------------------------------------------------------------------------------------------
                                       County/county                             Proposed
         FIPS county code               equivalent               State          CBSA code    Proposed CBSA name
----------------------------------------------------------------------------------------------------------------
01063............................  Greene..............  AL                          46220  Tuscaloosa, AL.
01129............................  Washington..........  AL                          33660  Mobile, AL.
05047............................  Franklin............  AR                          22900  Fort Smith, AR-OK.
12075............................  Levy................  FL                          23540  Gainesville, FL.
13259............................  Stewart.............  GA                          17980  Columbus, GA-AL.
13263............................  Talbot..............  GA                          17980  Columbus, GA-AL.
16077............................  Power...............  ID                          38540  Pocatello, ID.
17057............................  Fulton..............  IL                          37900  Peoria, IL.
17087............................  Johnson.............  IL                          16060  Carbondale-Marion,
                                                                                             IL.
18047............................  Franklin............  IN                          17140  Cincinnati, OH-KY-
                                                                                             IN.
18121............................  Parke...............  IN                          45460  Terre Haute, IN.
18171............................  Warren..............  IN                          29200  Lafayette-West
                                                                                             Lafayette, IN.
19015............................  Boone...............  IA                          11180  Ames, IA.
19099............................  Jasper..............  IA                          19780  Des Moines-West Des
                                                                                             Moines, IA.
20061............................  Geary...............  KS                          31740  Manhattan, KS.
21043............................  Carter..............  KY                          26580  Huntington-Ashland,
                                                                                             WV-KY-OH.
22007............................  Assumption..........  LA                          12940  Baton Rouge, LA.
22067............................  Morehouse...........  LA                          33740  Monroe, LA.
25011............................  Franklin............  MA                          44140  Springfield, MA.
26067............................  Ionia...............  MI                          24340  Grand Rapids-
                                                                                             Kentwood, MI.
26155............................  Shiawassee..........  MI                          29620  Lansing-East
                                                                                             Lansing, MI.
27075............................  Lake................  MN                          20260  Duluth, MN-WI.
28031............................  Covington...........  MS                          25620  Hattiesburg, MS.
28051............................  Holmes..............  MS                          27140  Jackson, MS.
28131............................  Stone...............  MS                          25060  Gulfport-Biloxi, MS.
29053............................  Cooper..............  MO                          17860  Columbia, MO.

[[Page 22078]]

 
29089............................  Howard..............  MO                          17860  Columbia, MO.
30095............................  Stillwater..........  MT                          13740  Billings, MT.
37007............................  Anson...............  NC                          16740  Charlotte-Concord-
                                                                                             Gastonia, NC-SC.
37029............................  Camden..............  NC                          47260  Virginia Beach-
                                                                                             Norfolk-Newport
                                                                                             News, VA-NC.
37077............................  Granville...........  NC                          20500  Durham-Chapel Hill,
                                                                                             NC.
37085............................  Harnett.............  NC                          22180  Fayetteville, NC.
39123............................  Ottawa..............  OH                          45780  Toledo, OH.
45027............................  Clarendon...........  SC                          44940  Sumter, SC.
47053............................  Gibson..............  TN                          27180  Jackson, TN.
47161............................  Stewart.............  TN                          17300  Clarksville, TN-KY.
48203............................  Harrison............  TX                          30980  Longview, TX.
48431............................  Sterling............  TX                          41660  San Angelo, TX.
51097............................  King And Queen......  VA                          40060  Richmond, VA.
51113............................  Madison.............  VA                          47894  Washington-Arlington-
                                                                                             Alexandria, DC-VA-
                                                                                             MD-WV.
51175............................  Southampton.........  VA                          47260  Virginia Beach-
                                                                                             Norfolk-Newport
                                                                                             News, VA-NC.
51620............................  Franklin City.......  VA                          47260  Virginia Beach-
                                                                                             Norfolk-Newport
                                                                                             News, VA-NC.
54035............................  Jackson.............  WV                          16620  Charleston, WV.
54065............................  Morgan..............  WV                          25180  Hagerstown-
                                                                                             Martinsburg, MD-WV.
55069............................  Lincoln.............  WI                          48140  Wausau-Weston, WI.
72001............................  Adjuntas............  PR                          38660  Ponce, PR.
72083............................  Las Marias..........  PR                          32420  Mayag[uuml]ez, PR.
----------------------------------------------------------------------------------------------------------------

    We are proposing that when calculating the area wage index, 
beginning with FY 2021, the wage data for hospitals located in these 
counties would be included in their new respective urban CBSAs. 
Typically, providers located in an urban area receive a higher wage 
index value than or equal to providers located in their State's rural 
area. We refer readers to section V.D.3. of this proposed rule for a 
discussion of the proposed wage index transition policy.
(4) Urban Counties That Would Move to a Different Urban CBSA Under the 
New OMB Delineations
    In certain cases, adopting the new OMB delineations would involve a 
change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19380 
(Dayton, OH) would experience both a change to its number and its name, 
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three 
constituent counties would remain the same. In other cases, only the 
name of the CBSA would be modified, and none of the currently assigned 
counties would be reassigned to a different urban CBSA. Table 7 shows 
the current CBSA code and our proposed CBSA code where we are proposing 
to change either the name or CBSA number only. We are not discussing 
further in this section these proposed changes because they are 
inconsequential changes with respect to the IRF PPS wage index.

                           Table 7--Current CBSAs That Would Change CBSA Code or Title
----------------------------------------------------------------------------------------------------------------
                                                                          Current
            Proposed CBSA code                 Proposed CBSA title       CBSA code        Current CBSA title
----------------------------------------------------------------------------------------------------------------
10540....................................  Albany-Lebanon, OR.........        10540  Albany, OR.
11500....................................  Anniston-Oxford, AL........        11500  Anniston-Oxford-
                                                                                      Jacksonville, AL.
12060....................................  Atlanta-Sandy Springs-             12060  Atlanta-Sandy Springs-
                                            Alpharetta, GA.                           Roswell, GA.
12420....................................  Austin-Round Rock-                 12420  Austin-Round Rock, TX.
                                            Georgetown, TX.
13460....................................  Bend, OR...................        13460  Bend-Redmond, OR.
13980....................................  Blacksburg-Christiansburg,         13980  Blacksburg-Christiansburg-
                                            VA.                                       Radford, VA.
14740....................................  Bremerton-Silverdale-Port          14740  Bremerton-Silverdale, WA.
                                            Orchard, WA.
15380....................................  Buffalo-Cheektowaga, NY....        15380  Buffalo-Cheektowaga-Niagara
                                                                                      Falls, NY.
19430....................................  Dayton-Kettering, OH.......        19380  Dayton, OH.
24340....................................  Grand Rapids-Kentwood, MI..        24340  Grand Rapids-Wyoming, MI.
24860....................................  Greenville-Anderson, SC....        24860  Greenville-Anderson-
                                                                                      Mauldin, SC.
25060....................................  Gulfport-Biloxi, MS........        25060  Gulfport-Biloxi-Pascagoula,
                                                                                      MS.
25540....................................  Hartford-East Hartford-            25540  Hartford-West Hartford-East
                                            Middletown, CT.                           Hartford, CT.
25940....................................  Hilton Head Island-                25940  Hilton Head Island-Bluffton-
                                            Bluffton, SC.                             Beaufort, SC.
28700....................................  Kingsport-Bristol, TN-VA...        28700  Kingsport-Bristol-Bristol,
                                                                                      TN-VA.
31860....................................  Mankato, MN................        31860  Mankato-North Mankato, MN.
33340....................................  Milwaukee-Waukesha, WI.....        33340  Milwaukee-Waukesha-West
                                                                                      Allis, WI.
34940....................................  Naples-Marco Island, FL....        34940  Naples-Immokalee-Marco
                                                                                      Island, FL.
35660....................................  Niles, MI..................        35660  Niles-Benton Harbor, MI.
36084....................................  Oakland-Berkeley-Livermore,        36084  Oakland-Hayward-Berkeley,
                                            CA.                                       CA.
36500....................................  Olympia-Lacey-Tumwater, WA.        36500  Olympia-Tumwater, WA.
38060....................................  Phoenix-Mesa-Chandler, AZ..        38060  Phoenix-Mesa-Scottsdale,
                                                                                      AZ.
39150....................................  Prescott Valley-Prescott,          39140  Prescott, AZ.
                                            AZ.
23224....................................  Frederick-Gaithersburg-            43524  Silver Spring-Frederick-
                                            Rockville, MD.                            Rockville, MD.
44420....................................  Staunton, VA...............        44420  Staunton-Waynesboro, VA.
44700....................................  Stockton, CA...............        44700  Stockton-Lodi, CA.

[[Page 22079]]

 
45940....................................  Trenton-Princeton, NJ......        45940  Trenton, NJ.
46700....................................  Vallejo, CA................        46700  Vallejo-Fairfield, CA.
47300....................................  Visalia, CA................        47300  Visalia-Porterville, CA.
48140....................................  Wausau-Weston, WI..........        48140  Wausau, WI.
48424....................................  West Palm Beach-Boca Raton-        48424  West Palm Beach-Boca Raton-
                                            Boynton Beach, FL.                        Delray Beach, FL.
----------------------------------------------------------------------------------------------------------------

    In some cases, if we adopt the new OMB delineations, counties would 
shift between existing and new CBSAs, changing the constituent makeup 
of the CBSAs. We consider this type of change, where CBSAs are split 
into multiple new CBSAs, or a CBSA loses one or more counties to 
another urban CBSA to be significant modifications.
    Table 8 lists the urban counties that would move from one urban 
CBSA to another a newly proposed or modified CBSA if we adopted the new 
OMB delineations.

                                      Table 8--Urban Counties That Would Move to a Newly Proposed or Modified CBSA
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Current                             Proposed
         FIPS county code                County name               State              CBSA       Current CBSA name     CBSA code     Proposed CBSA name
--------------------------------------------------------------------------------------------------------------------------------------------------------
17031.............................  Cook.................  IL                           16974  Chicago-Naperville-          16984  Chicago-Naperville-
                                                                                                Arlington Heights,                  Evanston, IL.
                                                                                                IL.
17043.............................  Du Page..............  IL                           16974  Chicago-Naperville-          16984  Chicago-Naperville-
                                                                                                Arlington Heights,                  Evanston, IL.
                                                                                                IL.
17063.............................  Grundy...............  IL                           16974  Chicago-Naperville-          16984  Chicago-Naperville-
                                                                                                Arlington Heights,                  Evanston, IL.
                                                                                                IL.
17093.............................  Kendall..............  IL                           16974  Chicago-Naperville-          20994  Elgin, IL.
                                                                                                Arlington Heights,
                                                                                                IL.
17111.............................  Mc Henry.............  IL                           16974  Chicago-Naperville-          16984  Chicago-Naperville-
                                                                                                Arlington Heights,                  Evanston, IL.
                                                                                                IL.
17197.............................  Will.................  IL                           16974  Chicago-Naperville-          16984  Chicago-Naperville-
                                                                                                Arlington Heights,                  Evanston, IL.
                                                                                                IL.
34023.............................  Middlesex............  NJ                           35614  New York-Jersey City-        35154  New Brunswick-
                                                                                                White Plains, NY-NJ.                Lakewood, NJ.
34025.............................  Monmouth.............  NJ                           35614  New York-Jersey City-        35154  New Brunswick-
                                                                                                White Plains, NY-NJ.                Lakewood, NJ.
34029.............................  Ocean................  NJ                           35614  New York-Jersey City-        35154  New Brunswick-
                                                                                                White Plains, NY-NJ.                Lakewood, NJ.
34035.............................  Somerset.............  NJ                           35084  Newark, NJ-PA........        35154  New Brunswick-
                                                                                                                                    Lakewood, NJ.
36027.............................  Dutchess.............  NY                           20524  Dutchess County-             39100  Poughkeepsie-Newburgh-
                                                                                                Putnam County, NY.                  Middletown, NY.
36071.............................  Orange...............  NY                           35614  New York-Jersey City-        39100  Poughkeepsie-Newburgh-
                                                                                                White Plains, NY-NJ.                Middletown, NY.
36079.............................  Putnam...............  NY                           20524  Dutchess County-             35614  New York-Jersey City-
                                                                                                Putnam County, NY.                  White Plains, NY-NJ.
47057.............................  Grainger.............  TN                           28940  Knoxville, TN........        34100  Morristown, TN.
54043.............................  Lincoln..............  WV                           26580  Huntington-Ashland,          16620  Charleston, WV.
                                                                                                WV-KY-OH.
72055.............................  Guanica..............  PR                           38660  Ponce, PR............        49500  Yauco, PR.
72059.............................  Guayanilla...........  PR                           38660  Ponce, PR............        49500  Yauco, PR.
72111.............................  Penuelas.............  PR                           38660  Ponce, PR............        49500  Yauco, PR.
72153.............................  Yauco................  PR                           38660  Ponce, PR............        49500  Yauco, PR.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If providers located in these counties move from one CBSA to 
another under the new OMB delineations, there may be impacts, both 
negative and positive, upon their specific wage index values. We refer 
readers to section V.D.3. of this proposed rule for a discussion of the 
proposed wage index transition policy due to these proposed changes.
    We believe these revisions to the CBSA-based labor market area 
delineations as established in OMB Bulletin 18-04 would ensure that the 
IRF PPS area wage level adjustment most appropriately accounts for and 
reflects the relative wage levels in the geographic area of the IRF. 
Therefore, we are proposing to adopt the revisions to the CSBA based 
labor market area delineations under the IRF PPS, effective October 1, 
2020. Accordingly, the proposed FY 2021 IRF PPS wage index values 
(which are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html) reflect the proposed revisions to the 
CBSA-based labor market area delineations.
    Furthermore, consistent with the requirement at Sec.  412.624(e)(1) 
that changes to area wage level adjustment are made in a budget neutral 
manner, we are proposing to adopt these revisions to the CSBA based 
labor market area delineations in a budget neutral manner. Our proposed 
methodology for calculating the proposed budget neutrality factor is 
discussed in section V.D.4. of this proposed rule.
    We invite public comment on the proposal to adopt the new OMB 
delineations, effective beginning with the FY 2021 IRF PPS wage index.
3. Proposed Transition Policy
    Overall, we believe that our proposal to adopt the revised OMB 
delineations for FY 2021 would result in wage index values being more 
representative of the actual costs of labor in a given area. However, 
we also recognize that approximately 5 percent of IRFs would experience 
decreases in their area wage index values as a result of our proposal 
to adopt the revised OMB delineations. We also realize that many IRFs 
would have higher area wage index values under our proposal.
    To mitigate the potential impacts of revisions to the OMB 
delineations on IRFs, we have in the past provided for transition 
periods when adopting changes that have significant payment 
implications, particularly large negative impacts. For example, we 
proposed and finalized budget neutral transition policies to help 
mitigate negative

[[Page 22080]]

impacts on IRFs following the adoption of the new CBSA delineations 
based on the 2010 decennial census data in the FY 2016 IRF PPS final 
rule (80 FR 47035). Specifically, we implemented a 1-year blended wage 
index for all IRFs due to our adoption of the revised delineations. 
This required calculating and comparing two wage indexes for each IRF 
since that blended wage index was computed as the sum of 50 percent of 
the FY 2016 IRF PPS wage index values under the FY 2015 CBSA 
delineations and 50 percent of the FY 2016 IRF PPS wage index values 
under the FY 2016 new OMB delineations. While we believed that using 
the new OMB delineations would create a more accurate payment 
adjustment for differences in area wage levels, we also recognized that 
adopting such changes may cause some short-term instability in IRF PPS 
payments, in particular for IRFs that would be negatively impacted by 
the proposed adoption of the updates to the OMB delineations. For 
example, IRF's currently located in CBSA 35614 (New York-Jersey City-
White Plains, NY-NJ) that would be located in new CBSA 35154 (New 
Brunswick-Lakewood, NJ) under the proposed changes to the CBSA-based 
labor market area delineations would experience a nearly 17 percent 
decrease in the wage index as a result of the proposed change. 
Therefore, consistent with past practice we are proposing a transition 
policy to help mitigate any significant negative impacts that IRFs may 
experience due to our proposal to adopt the revised OMB delineations 
under the IRF PPS. Specifically, for FY 2021 as a transition, we are 
proposing to apply a 5 percent cap on any decrease in an IRF's wage 
index from the IRF's wage index from the prior FY. This transition 
would allow the effects of our proposed adoption of the revised OMB 
delineations to be phased in over 2 years, where the estimated 
reduction in an IRF's wage index would be capped at 5 percent in FY 
2021 (that is, no cap would be applied to any reductions in the wage 
index for the second year (FY 2022)). We believe a 5 percent cap on the 
overall decrease in an IRF's wage index value would be an appropriate 
transition as it would effectively mitigate any significant decreases 
in an IRF's wage index for FY 2021.
    Furthermore, consistent with the requirement at Sec.  412.624(e)(1) 
that changes to area wage level adjustment are made in a budget neutral 
manner, we are proposing that this proposed transitional wage index 
would not result in any change in estimated aggregate IRF PPS payments 
by applying a budget neutrality factor to the standard payment 
conversion factor. Our proposed methodology for calculating this 
proposed budget neutrality factor is discussed below in section V.D.4. 
of this proposed rule.
    We invite comments on our proposed implementation of the new OMB 
delineations and our proposed transition methodology.
4. Proposed Wage Adjustment
    To calculate the wage-adjusted facility payment for the proposed 
payment rates set forth in this proposed rule, we would multiply the 
proposed unadjusted Federal payment rate for IRFs by the FY 2021 labor-
related share based on the 2016-based IRF market basket relative 
importance (72.9 percent) to determine the labor-related portion of the 
standard payment amount. A full discussion of the calculation of the 
labor-related share is located in section V.C. of this proposed rule. 
We would then multiply the labor-related portion by the applicable IRF 
wage index. The wage index tables are available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
    Adjustments or updates to the IRF wage index made under section 
1886(j)(6) of the Act must be made in a budget-neutral manner. We 
propose to calculate a 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 propose to 
use the listed steps to ensure that the FY 2021 IRF standard payment 
conversion factor reflects the proposed update to the wage indexes 
(based on the FY 2017 hospital cost report data and taking into account 
the proposed revisions to the OMB delineations and the transition 
policy) and the proposed update to the labor-related share, in a 
budget-neutral manner:
    Step 1. Calculate the total amount of estimated IRF PPS payments 
using the labor-related share and the wage indexes from FY 2020 (as 
published in the FY 2020 IRF PPS final rule (84 FR 39054)).
    Step 2. Calculate the total amount of estimated IRF PPS payments 
using the proposed FY 2021 wage index values (based on updated hospital 
wage data and taking into account the proposed changes to geographic 
labor market area delineations and the transition policy) and the 
proposed FY 2021 labor-related share of 72.9 percent.
    Step 3. Divide the amount calculated in step 1 by the amount 
calculated in step 2. The resulting quotient is the proposed FY 2021 
budget-neutral wage adjustment factor of 0.9999.
    Step 4. Apply the budget neutrality factor from step 3 to the FY 
2021 IRF PPS standard payment amount after the application of the 
increase factor to determine the proposed FY 2021 standard payment 
conversion factor.
    We discuss the calculation of the proposed standard payment 
conversion factor for FY 2021 in section V.E. of this proposed rule.
    We invite public comment on the proposed IRF wage adjustment for FY 
2021.

E. Description of the Proposed IRF Standard Payment Conversion Factor 
and Payment Rates for FY 2021

    To calculate the proposed standard payment conversion factor for FY 
2021, as illustrated in Table 5, we begin by applying the proposed 
increase factor for FY 2021, as adjusted in accordance with sections 
1886(j)(3)(C) of the Act, to the standard payment conversion factor for 
FY 2020 ($16,489). Applying the proposed 2.5 percent increase factor 
for FY 2021 to the standard payment conversion factor for FY 2020 of 
$16,489 yields a standard payment amount of $16,901. Then, we apply the 
proposed budget neutrality factor for the FY 2021 wage index (taking 
into account the proposed revisions to the CBSA delineations and the 
transition policy), and labor-related share of 0.9999, which results in 
a proposed standard payment amount of $16,900. We next apply the 
proposed budget neutrality factor for the revised CMGs and CMG relative 
weights of 0.9969, which results in the standard payment conversion 
factor of $16,847 for FY 2021.
    We invite public comment on the proposed FY 2021 standard payment 
conversion factor.

Table 9--Calculations to Determine the Proposed FY 2021 Standard Payment
                            Conversion Factor
------------------------------------------------------------------------
          Explanation for adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY      $16,489
 2020.

[[Page 22081]]

 
Market Basket Increase Factor for FY 2021      x 1.025
 (2.9 percent), reduced by 0.4 percentage
 point for the productivity adjustment as
 required by section 1886(j)(3)(C)(ii)(I) of
 the Act.
Budget Neutrality Factor for the Updates to    x 0.9999
 the Wage Index and Labor-Related Share.
Budget Neutrality Factor for the Revisions to  x 0.9969
 the CMGs and CMG Relative Weights.
Proposed FY 2020 Standard Payment Conversion   = $16,847
 Factor.
------------------------------------------------------------------------

    After the application of the proposed CMG relative weights 
described in section IV. of this proposed rule to the proposed FY 2021 
standard payment conversion factor ($16,847), the resulting unadjusted 
IRF prospective payment rates for FY 2021 are shown in Table 10.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

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

    Table 11 illustrates the methodology for adjusting the proposed 
prospective payments (as described in section V. of this proposed 
rule). The following examples are based on two hypothetical Medicare 
beneficiaries, both classified into CMG 0104 (without comorbidities). 
The proposed unadjusted prospective payment rate for CMG 0104 (without 
comorbidities) appears in Table 10.
    Example: One beneficiary is in Facility A, an IRF located in rural 
Spencer County, Indiana, and another beneficiary is in Facility B, an 
IRF located in urban Harrison County, Indiana. Facility A, a rural non-
teaching hospital has a Disproportionate Share Hospital (DSH) 
percentage of 5 percent (which would result in a LIP adjustment of 
1.0156), a wage index of 0.8382, and a rural adjustment of 14.9 
percent. Facility B, an urban teaching hospital, has a DSH percentage 
of 15 percent (which would result in a LIP adjustment of 1.0454 
percent), a wage index of 0.8683, and a teaching status adjustment of 
0.0784.
    To calculate each IRF's labor and non-labor portion of the proposed 
prospective payment, we begin by taking the unadjusted prospective 
payment rate for CMG 0104 (without comorbidities) from Table 10. Then, 
we multiply the proposed labor-related share for FY 2021 (72.9 percent) 
described in section V.C. of this proposed rule by the proposed 
unadjusted prospective payment rate. To determine the non-labor portion 
of the proposed prospective payment rate, we subtract the labor portion 
of the Federal payment from the proposed unadjusted prospective 
payment.
    To compute the proposed wage-adjusted prospective payment, we 
multiply the labor portion of the proposed Federal payment by the 
appropriate wage index located in Tables A and B. These tables are 
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
    The resulting figure is the wage-adjusted labor amount. Next, we 
compute the proposed wage-adjusted Federal payment by adding the wage-
adjusted labor amount to the non-labor portion of the proposed Federal 
payment.
    Adjusting the proposed wage-adjusted Federal payment by the 
facility-level adjustments involves several steps. First, we take the 
wage-adjusted prospective payment and multiply it by the appropriate 
rural and LIP adjustments (if applicable). Second, to determine the 
appropriate amount of additional payment for the teaching status 
adjustment (if applicable), we multiply the teaching status adjustment 
(0.0784, in this example) by the wage-adjusted and rural-adjusted 
amount (if applicable). Finally, we add the additional teaching status 
payments (if applicable) to the wage, rural, and LIP-adjusted 
prospective payment rates. Table 11 illustrates the components of the 
adjusted payment calculation.

   Table 11--Example of Computing the FY 2021 IRF Prospective Payment
------------------------------------------------------------------------
                                                        Urban Facility B
     Steps                           Rural Facility A    (Harrison Co.,
                                    (Spencer Co., IN)         IN)
------------------------------------------------------------------------
1..............  Unadjusted                $27,989.61         $27,989.61
                  Payment.
2..............  Labor Share......            x 0.729            x 0.729
3..............  Labor Portion of        = $20,404.43       = $20,404.43
                  Payment.
4..............  CBSA-Based Wage             x 0.8382           x 0.8683
                  Index (shown in
                  the Addendum,
                  Tables A and B).
5..............  Wage-Adjusted           = $17,102.99       = $17,717.16
                  Amount.
6..............  Non-Labor Amount.        + $7,585.18        + $7,585.18
7..............  Wage-Adjusted           = $24,688.17       = $25,302.35
                  Payment.
8..............  Rural Adjustment.            x 1.149            x 1.000
9..............  Wage- and Rural-        = $28,366.71       = $25,302.35
                  Adjusted Payment.
10.............  LIP Adjustment...           x 1.0156           x 1.0454
11.............  Wage-, Rural- and       = $28,809.23       = $26,451.07
                  LIP-Adjusted
                  Payment.
12.............  Wage-and Rural-           $28,366.71         $25,302.35
                  Adjusted Payment.
13.............  Teaching Status                  x 0           x 0.0784
                  Adjustment.
14.............  Teaching Status              = $0.00        = $1,983.70
                  Adjustment
                  Amount.
15.............  Wage-, Rural-,          + $28,809.23       + $26,451.07
                  and LIP-Adjusted
                  Payment.
16.............  Total Adjusted          = $28,809.23       = $28,434.78
                  Payment.
------------------------------------------------------------------------

    Thus, the proposed adjusted payment for Facility A would be 
$28,809.23, and the adjusted payment for Facility B would be 
$28,434.78.

VI. Proposed Update to Payments for High-Cost Outliers Under the IRF 
PPS for FY 2021

A. Proposed Update to the Outlier Threshold Amount for FY 2021

    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).

[[Page 22085]]

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 2020 IRF PPS final rules and the FY 2011 and FY 2013 
notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR 
39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, 77 FR 44618, 78 FR 47860, 
79 FR 45872, 80 FR 47036, 81 FR 52056, 82 FR 36238, 83 FR 38514, and 84 
FR 39054, 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 2021, we propose 
to use FY 2019 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 2020. The outlier threshold is calculated by 
simulating aggregate payments and using an iterative process to 
determine a threshold that results in outlier payments being equal to 3 
percent of total payments under the simulation. To determine the 
outlier threshold for FY 2021, we estimate the amount of FY 2021 IRF 
PPS aggregate and outlier payments using the most recent claims 
available (FY 2019) and the proposed FY 2021 standard payment 
conversion factor, labor-related share, and wage indexes, incorporating 
any applicable budget-neutrality adjustment factors. The outlier 
threshold is adjusted either up or down in this simulation until the 
estimated outlier payments equal 3 percent of the estimated aggregate 
payments. Based on an analysis of the preliminary data used for the 
proposed rule, we estimated that IRF outlier payments as a percentage 
of total estimated payments would be approximately 2.6 percent in FY 
2020. Therefore, we propose to update the outlier threshold amount from 
$9,300 for FY 2020 to $8,102 for FY 2021 to maintain estimated outlier 
payments at approximately 3 percent of total estimated aggregate IRF 
payments for FY 2021.
    We invite public comment on the proposed update to the FY 2021 
outlier threshold amount to maintain estimated outlier payments at 
approximately 3 percent of total estimated IRF payments.

B. Proposed Update to the IRF Cost-to-Charge Ratio Ceiling and Urban/
Rural Averages for FY 2021

    Cost-to-charge ratios (CCRs) are used to adjust charges from 
Medicare claims to costs and are computed annually from facility-
specific data obtained from MCRs. IRF specific CCRs are used in the 
development of the CMG relative weights and the calculation of outlier 
payments under the IRF PPS. In accordance with the methodology stated 
in the FY 2004 IRF PPS final rule (68 FR 45674, 45692 through 45694), 
we proposed to 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 
2021, 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 MCR.
     IRFs whose overall CCR is in excess of the national CCR 
ceiling for FY 2021, as discussed below in this section.
     Other IRFs for which accurate data to calculate an overall 
CCR are not available.
    Specifically, for FY 2021, we propose to estimate a national 
average CCR of 0.490 for rural IRFs, which we calculated by taking an 
average of the CCRs for all rural IRFs using their most recently 
submitted cost report data. Similarly, we propose to estimate a 
national average CCR of 0.400 for urban IRFs, which we calculated by 
taking an average of the CCRs for all urban IRFs using their most 
recently submitted cost report data. We apply weights to both of these 
averages using the IRFs' estimated costs, meaning that the CCRs of IRFs 
with higher total costs factor more heavily into the averages than the 
CCRs of IRFs with lower total costs. For this proposed rule, we have 
used the most recent available cost report data (FY 2018). This 
includes all IRFs whose cost reporting periods begin on or after 
October 1, 2017, and before October 1, 2018. If, for any IRF, the FY 
2018 cost report was missing or had an ``as submitted'' status, we used 
data from a previous FY's (that is, FY 2004 through FY 2017) settled 
cost report for that IRF. We do not use cost report data from before FY 
2004 for any IRF because changes in IRF utilization since FY 2004 
resulting from the 60 percent rule and IRF medical review activities 
suggest that these older data do not adequately reflect the current 
cost of care. Using updated FY 2018 cost report data for this proposed 
rule, we estimate a national average CCR of 0.490 for rural IRFs, and a 
national average CCR of 0.400 for urban IRFs.
    In accordance with past practice, we propose to set the national 
CCR ceiling at 3 standard deviations above the mean CCR. Using this 
method, we propose a national CCR ceiling of 1.33 for FY 2021. This 
means that, if an individual IRF's CCR were to exceed this ceiling of 
1.33 for FY 2021, we would replace the IRF's CCR with the appropriate 
proposed national average CCR (either rural or urban, depending on the 
geographic location of the IRF). We calculated the proposed national 
CCR ceiling by:
    Step 1. Taking the national average CCR (weighted by each IRF's 
total costs, as previously discussed) of all IRFs for which we have 
sufficient cost report data (both rural and urban IRFs combined).
    Step 2. Estimating the standard deviation of the national average 
CCR computed in step 1.
    Step 3. Multiplying the standard deviation of the national average 
CCR computed in step 2 by a factor of 3 to compute a statistically 
significant reliable ceiling.
    Step 4. Adding the result from step 3 to the national average CCR 
of all IRFs for which we have sufficient cost report data, from step 1.
    We are also proposing that if more recent data become available 
after the publication of this proposed rule and before the publication 
of the final rule, we would use such data to determine the FY 2021 
national average rural and urban CCRs and the national CCR ceiling in 
the final rule.
    We invite public comment on the proposed update to the IRF CCR 
ceiling

[[Page 22086]]

and the urban/rural averages for FY 2021.

VII. Proposed Removal of the Post-Admission Physician Evaluation 
Requirement From the IRF Coverage Requirements

    We are committed to transforming the health care delivery system, 
and the Medicare program, by putting an additional focus on patient-
centered care and working with providers and clinicians to improve 
patient outcomes. We refer to this transformation as ``Patients Over 
Paperwork.'' That is, CMS recognizes it is imperative that we develop 
and implement policies that allow providers and clinicians to focus the 
majority of their time treating patients rather than completing 
paperwork. Moreover, we believe it is essential for us to reexamine 
current regulations and administrative requirements to ensure that we 
are not placing unnecessary burden on providers.
    In the FY 2018 IRF PPS proposed rule (82 FR 20743), we included a 
request for information (RFI) to solicit comments from stakeholders 
requesting information on CMS flexibilities and efficiencies. The 
purpose of the RFI was to receive feedback regarding ways in which we 
could reduce burden for hospitals and clinicians, improve quality of 
care, decrease costs and ensure that patients receive the best care. We 
received comments from IRF industry associations, state and national 
hospital associations, industry groups representing hospitals, and 
individual IRF providers in response to the solicitation. In the FY 
2019 IRF PPS final rule (83 FR 38549 through 38553), we finalized 
several changes to the regulatory requirements that we believed were 
responsive to stakeholder feedback and helpful to providers in reducing 
administrative burden.
    Patients over Paperwork has continued to be a priority for the 
agency, as we target ways in which we can reduce paperwork burden for 
hospitals and clinicians while improving quality of care for patients. 
Therefore, we are proposing to revise the current IRF coverage 
criteria. Specifically, we are focused on reducing medical record 
documentation requirements that we believe are no longer necessary.
    IRF care is only considered by Medicare to be reasonable and 
necessary under section 1862(a)(1) of the Act if the patient meets all 
of the IRF coverage requirements outlined in Sec.  412.622(a)(3), (4), 
and (5). Failure to meet the IRF coverage criteria in a particular case 
will result in denial of the IRF claim. Under Sec.  412.622(a)(4)(ii), 
to document that each patient for whom the IRF seeks payment is 
reasonably expected to meet all of the requirements in Sec.  
412.622(a)(3) at the time of admission, the patient's medical record at 
the IRF must contain a post-admission physician evaluation that meets 
ALL of the following requirements:
     It is completed by the rehabilitation physician within 24 
hours of the patient's admission to the IRF.
     It documents the patient's status on admission to the IRF, 
includes a comparison with the information noted in the preadmission 
screening documentation, and serves as the basis for the development of 
the overall individualized plan of care.
     It is retained in the patient's medical record at the IRF.
    Before the current IRF coverage criteria were implemented in 
January 1, 2010, Medicare permitted ``trial'' IRF admissions (HCFAR 85-
2-4 through 85-2-5). A ``trial'' IRF admission meant that patients were 
sometimes admitted to IRFs for 3 to 10 days to assess whether the 
patients would benefit significantly from treatment in the IRF or other 
settings. Therefore, if it was determined during a ``trial'' admission 
that a patient was not appropriate for IRF level services, their claims 
for items and services provided during the trial period could not be 
denied for failure to meet IRF coverage criteria. Over time, we 
concluded that IRFs had developed a better ability and were more 
capable of recognizing if a patient was appropriate for IRF services 
prior to being admitted. Therefore, the concept of a ``trial'' IRF 
admission was eliminated when we rescinded HCFA Ruling 85-2 through a 
Federal Register notice titled ``Medicare Program; Criteria for 
Medicare Coverage of Inpatient Hospital Rehabilitation Services'' (74 
FR 54835), effective January 1, 2010. We discussed our intent to 
rescind HCFA Ruling 85-2 in detail in the FY 2010 IRF PPS final rule 
(74 FR 39797 through 39798).
    In addition, the Medicare Benefit Policy Manual, chapter 1, section 
110.1.2 (Pub. 100-02), which can be downloaded from the CMS website at 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html), states, ``In most cases, the clinical picture 
of the patient that emerges from the post-admission physician 
evaluation will closely resemble the information documented in the 
preadmission screening. However, for a variety of reasons, the 
patient's condition at the time of admission may occasionally not match 
the description of the patient's condition on the preadmission 
screening. If this occurs, the IRF must immediately begin the discharge 
process. It may take a day or more for the IRF to find placement for 
the patient in another setting of care. [Medicare Administrative 
Contractors (MACs)] will therefore allow the patient to continue 
receiving treatment in the IRF until placement in another setting can 
be found.'' It further states that in these particular cases, 
``Medicare authorizes its MACs to permit the IRF claim to be paid at 
the appropriate CMG for IRF patient stays of 3 days or less.''
    At this time, we believe that IRFs are more knowledgeable in 
determining prior to admission, whether a patient meets the coverage 
criteria for IRF services than they were when the IRF coverage 
requirements were initially implemented. Over time, we have analyzed 
the data regarding the number of above-mentioned cases described in 
chapter 1, section 110.1.2, of the Medicare Benefit Policy Manual, and 
it has trended downward since the IRF coverage requirements were 
initially implemented. In FY 2019, the payment was utilized 4 times 
across all 1,117 Medicare certified IRFs. Additionally, we believe that 
if IRFs are doing their due diligence while completing the pre-
admission screening as required in Sec.  412.622(a)(4)(i) by making 
sure each prospective IRF patient meets all of the requirements to be 
admitted to the IRF, then the post-admission physician evaluation is 
unnecessary.
    Finally, we have removed the post-admission physician evaluation 
requirement during the public health emergency for the COVID-19 
pandemic in the interim final rule with comment entitled, ``Medicare 
and Medicaid Programs; Policy and Regulatory Revisions in Response to 
the COVID-19 Public Health Emergency'', published on April 6, 2020 (85 
FR 19230) (hereinafter referred to as the April 6, 2020 IFC). We 
believe that this will provide us with experience to determine whether 
this requirement can be removed permanently to reduce paperwork burden 
for hospitals and clinicians while improving quality of care for 
patients.
    Therefore, we are proposing to remove the post-admission physician 
evaluation documentation requirement at Sec.  412.622(a)(4)(ii) 
beginning with FY 2021, that is, for all IRF discharges beginning on or 
after October 1, 2020. Accordingly, we are proposing to amend Sec.  
412.622(a)(3)(iv) to remove the reference to Sec.  412.622(a)(4)(ii). 
We would also rescind the above-mentioned policy described in chapter 
1, section

[[Page 22087]]

110.1.2, of the Medicare Benefit Policy Manual.
    In the April 6, 2020 IFC, to address the public health emergency 
for the COVID-19 pandemic, we finalized removal of the post-admission 
physician evaluation requirement at Sec.  412.622(a)(4)(ii) only for 
the duration of the public health emergency for the COVID-19 pandemic. 
In this proposed rule, we are proposing to remove the requirement at 
Sec.  412.622(a)(4)(ii) permanently, beginning in FY 2021.
    We note that our proposal would not preclude an IRF patient from 
being evaluated by a rehabilitation physician or, if the proposed 
policy changes in section XI. of this proposed rule are finalized, non-
physician practitioners within the first 24 hours of admission if the 
IRF believes that the patient's condition warrants such an evaluation. 
We are simply proposing that a post-admission physician evaluation 
would no longer be an IRF documentation requirement. Nor would our 
proposal remove one of the required rehabilitation physician visits in 
the first week of the patient's stay in the IRF as specified in Sec.  
412.622(a)(3)(iv). IRFs will need to continue to meet the requirements 
at Sec.  412.622(a)(3)(iv) as they always have.
    While this proposal does not attribute to any direct savings for 
Medicare Part-A or Part-B, we do believe that removing the post-
admission physician evaluation would reduce administrative and 
paperwork burden for both IRF providers and MACs.
    We invite public comment on our proposal to remove the post-
admission physician evaluation documentation requirement at Sec.  
412.622(a)(4)(ii) beginning with FY 2021, that is, for all IRF 
discharges beginning on or after October 1, 2020, and our proposed 
conforming amendments to Sec.  412.622(a)(3)(iv) to remove the 
reference to Sec.  412.622(a)(4)(ii). We anticipate that stakeholders' 
experience with the removal of this requirement during the public 
health emergency for the COVID-19 pandemic will help to inform whether 
removing this requirement permanently can reduce the paperwork burden 
for IRFs while maintaining quality of care for beneficiaries. We also 
invite public comment on rescinding the above-mentioned policy 
described in chapter 1, sections 110.1.2, of the Medicare Benefit 
Policy Manual.

VIII. Proposed Revisions to Certain IRF Coverage Documentation 
Requirements

A. Codification of Existing Preadmission Screening Documentation 
Instructions and Guidance

    Another way in which CMS has continued to explore burden reduction 
for providers and clinicians, while keeping patient centered care a 
priority, is by reviewing subregulatory guidance to identify any 
longstanding policies, instructions, or guidance that would be 
appropriate to codify through notice and comment rulemaking.
    Specifically, in regards to the IRF PPS payment requirements, we 
conducted a detailed review of the Medicare Benefit Policy Manual, 
chapter 1, section 110.1.2 (Pub. 100-02), as well as, the IRF PPS 
website (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index), to identify any such policies.
    Currently, Sec.  412.622(a)(4)(i) requires that a comprehensive 
preadmission screening must meet ALL of the following requirements:
     It is conducted by a licensed or certified clinician(s) 
designated by a rehabilitation physician described in Sec.  
412.622(a)(3)(iv) within the 48 hours immediately preceding the IRF 
admission.
     It includes a detailed and comprehensive review of each 
patient's condition and medical history.
     It serves as the basis for the initial determination of 
whether or not the patient meets the requirements for an IRF admission 
to be considered reasonable and necessary in Sec.  412.622(a)(3).
     It is used to inform a rehabilitation who reviews and 
comments his or her concurrence with the findings and results of the 
preadmission screening.
     It is retained in the patient's medical record at the IRF.
    When the pre-admission screening documentation requirements were 
finalized (74 FR 39790 through 39792), we did not specify any 
individual elements as being required for the pre-admission screening 
documentation to be considered detailed and comprehensive in accordance 
with Sec.  412.622(a)(4)(i)(B). In addition, we did not specify at 
Sec.  412.622(a)(4)(i)(D) that the rehabilitation physician must review 
and concur with the preadmission screening prior to the IRF admission. 
The Medicare Benefit Policy Manual, chapter 1, section 110.1.1 (Pub. 
100-02) provides a more detailed description of what elements the 
preadmission screening should include and clarifies that the 
rehabilitation physician should review and concur with the preadmission 
screening prior to the patient being admitted to the IRF.
    In chapter 1, section 110.1.1 of the Medicare Benefit Policy Manual 
currently, we state, ``The preadmission screening documentation must 
indicate the patient's prior level of function (prior to the event or 
condition that led to the patient's need for intensive rehabilitation 
therapy), expected level of improvement, and the expected length of 
time necessary to achieve that level of improvement. It must also 
include an evaluation of the patient's risk for clinical complications, 
the conditions that caused the need for rehabilitation, the treatments 
needed (that is, physical therapy, occupational therapy, speech-
language pathology, or prosthetics/orthotics), expected frequency and 
duration of treatment in the IRF, anticipated discharge destination, 
any anticipated post-discharge treatments, and other information 
relevant to the care needs of the patient.'' Additionally, we state, 
``All findings of the preadmission screening must be conveyed to a 
rehabilitation physician prior to the IRF admission. In addition, the 
rehabilitation physician must document that he or she has reviewed and 
concurs with the findings and results of the preadmission screening 
prior to the IRF admission.'' These have been our documentation 
instructions and guidance since the implementation of the IRF coverage 
requirements on January 1, 2010.
    We believe that codifying these longstanding instructions and 
guidance would improve clarity and reduce administrative burden on both 
IRF providers and MACs. With patient centered care being such a high 
priority in today's healthcare climate, we want to mitigate, as much as 
possible, tasks that take away from time spent directly with the 
patient. Lastly, we believe IRF providers and MACs will appreciate all 
preadmission screening documentation requirements being located in the 
same place for ease of reference.
    Thus, in the interest of reducing administrative burden and being 
able to locate all preadmission screening documentation requirements in 
the same place for ease of reference, we are proposing to make the 
following regulatory amendments:
     At Sec.  412.622(a)(4)(i)(B), to provide that the 
comprehensive preadmission screening must include a detailed and 
comprehensive review of each patient's condition and medical history, 
including the patient's level of function prior to the event or 
condition that led to the patient's need for intensive rehabilitation 
therapy, expected level of improvement, and the expected length

[[Page 22088]]

of time necessary to achieve that level of improvement; an evaluation 
of the patient's risk for clinical complications; the conditions that 
caused the need for rehabilitation; the treatments needed (that is, 
physical therapy, occupational therapy, speech-language pathology, or 
prosthetics/orthotics); expected frequency and duration of treatment in 
the IRF; anticipated discharge destination; and anticipated post-
discharge treatments; and
     At Sec.  412.622(a)(4)(i)(D), to provide that the 
comprehensive preadmission screening must be used to inform a 
rehabilitation physician who must then review and document his or her 
concurrence with the findings and results of the preadmission screening 
prior to the IRF admission. We refer readers to section IX. of this 
proposed rule for a discussion of our proposal to amend the IRF 
coverage requirements to allow non-physician practitioners to perform 
certain requirements that are currently required to be performed by a 
rehabilitation physician.
    We invite public comment on our proposal to amend Sec.  
412.622(a)(4)(i)(B) and (D) to codify our longstanding documentation 
instructions and guidance of the preadmission screening in regulation 
text.

B. Definition of a ``Week''

    In Sec.  412.622(a)(3)(ii) we state that in certain well-documented 
cases, this intensive rehabilitation therapy program might instead 
consist of at least 15 hours of intensive rehabilitation therapy within 
a 7 consecutive day period, beginning with the date of admission to the 
IRF. This language is also used many times throughout the IRF Services 
section of the Medicare Benefit Policy Manual. For more information, we 
refer readers to the Medicare Benefit Policy Manual, chapter 1, section 
110.1.2 (Pub. 100-02), which can be downloaded from the CMS website at 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    However, we understand there is some question as to whether the 
term ``week'' may be construed as a different period (for example, 
Monday through Sunday). To provide clarity and reduce administrative 
burden for stakeholders regarding several of the IRF coverage 
requirements, we are proposing to amend our regulation text to clarify 
that we define a ``week'' as ``a 7 consecutive calendar day period'' 
for purposes of the IRF coverage requirements.
    Therefore, we are proposing to amend Sec.  412.622(c) to clarify 
our definition of a ``week'' as a period of ``7 consecutive calendar 
days beginning with the date of admission to the IRF.'' We are also 
proposing to make conforming amendments to Sec.  412.622(a)(3)(ii) by 
replacing ``7 consecutive day period, beginning with the date of 
admission to the IRF'' with ``week''.
    We invite public comment on these proposals.

C. Solicitation of Comments Regarding Further Changes to the 
Preadmission Screening Documentation Requirements

    As noted in section VII. of this proposed rule, we are considering 
ways in which we can continue to help reduce administrative burden on 
IRF providers. Specifically, we have been reviewing the pre-admission 
screening documentation requirements under Sec.  412.622(a)(4)(i) and 
are considering whether we could remove some of the requirements, but 
still maintain an IRF patient's clinical history, as well as 
documentation of their medical and functional needs in sufficient 
detail to adequately describe and support the patient's need for IRF 
services.
    To assist us in balancing the needs of the patient with the desire 
to reduce the regulatory burden on rehabilitation physicians, we are 
seeking feedback from stakeholders about potentially removing some of 
the preadmission screening documentation requirements. Specifically, we 
would appreciate feedback regarding:
     What aspects of the preadmission screening do stakeholders 
believe are most or least critical and useful for supporting the 
appropriateness of an IRF admission, and why?

IX. Proposal To Allow Non-Physician Practitioners To Perform Certain 
IRF Coverage Requirements That Are Currently Required To Be Performed 
by a Rehabilitation Physician

    Several of the IRF coverage requirements at Sec.  412.622(a)(3), 
(4), and (5) expressly state that a requirement must be completed by a 
rehabilitation physician, defined at Sec.  412.622(c) as a licensed 
physician who is determined by the IRF to have specialized training and 
experience in inpatient rehabilitation. For example, under Sec.  
412.622(a)(3)(iv), for an IRF claim to be considered reasonable and 
necessary under section 1862(a)(1) of the Act, there must be a 
reasonable expectation at the time of the patient's admission to the 
IRF that the patient requires physician supervision by a rehabilitation 
physician. The requirement for medical supervision means that the 
rehabilitation physician must conduct face-to-face visits with the 
patient at least 3 days per week throughout the patient's stay in the 
IRF to assess the patient both medically and functionally, as well as 
to modify the course of treatment as needed to maximize the patient's 
capacity to benefit from the rehabilitation process. For more 
information, please refer to the Medicare Benefit Policy Manual, 
chapter 1, section 110.2.4 (Pub. 100-02), which can be downloaded from 
the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.
    In addition, under Sec.  412.622(a)(4)(ii), to document that each 
patient for whom the IRF seeks payment is reasonably expected to meet 
all of the requirements in Sec.  412.622(a)(3) at the time of 
admission, the patient's medical record at the IRF must contain a post-
admission physician evaluation that must, among other requirements, be 
completed by a rehabilitation physician within 24 hours of the 
patient's admission to the IRF. For more information, we refer readers 
to the Medicare Benefit Policy Manual, chapter 1, section 110.1.2 (Pub. 
100-02), which can be downloaded from the CMS website at https://
www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-
Manuals-IOMs.html.
    In response to the RFI in the FY 2018 proposed rule (82 FR 20742 
through 20743), we received comments suggesting that we consider 
amending the requirements in Sec.  412.622(a)(3)(iv) and (a)(4)(ii) to 
allow non-physician practitioners to fulfill some of the requirements 
that rehabilitation physicians are currently required to complete. The 
commenters suggested that expanding the use of non-physician 
practitioners in meeting some of the IRF coverage requirements would 
ease the documentation burden on rehabilitation physicians.
    We solicited additional comments in the FY 2019 proposed rule (83 
FR 20998 through 20999) on potentially allowing non-physician 
practitioners to fulfill some of the requirements in Sec.  
412.622(a)(3), (4), and (5) that rehabilitation physicians are 
currently required to complete. Specifically, we sought feedback from 
the industry and asked:
     Does the IRF industry believe non-physician practitioners 
have the specialized training in rehabilitation that they need to have 
to appropriately assess IRF patients both medically and functionally?
     How would the non-physician practitioner's credentials be 
documented and monitored to ensure that IRF patients are receiving high 
quality care?

[[Page 22089]]

     Do stakeholders believe that utilizing non-physician 
practitioners to fulfill some of the requirements that are currently 
required to be completed by a rehabilitation physician would have an 
impact of the quality of care for IRF patients?
    We received significant feedback in response to our solicitation of 
comments on allowing non-physician practitioners to fulfill the 
requirements at Sec.  412.622(a)(3), (4) and (5). However, the comments 
from stakeholders were conflicting. Some commenters expressed concern 
with allowing non-physician practitioners to fulfill some or all of the 
requirements that rehabilitation physicians are currently required to 
meet. These commenters generally raised the following specific 
concerns:
     The first concern was that IRF patients would not continue 
receiving the hospital level and quality of care that is necessary to 
treat such complex conditions in an IRF if being treated only by a non-
physician practitioner.
     The second concern was that non-physician practitioners 
have no specialized training in inpatient rehabilitation that would 
enable them to adequately assess the interaction between patients' 
medical and functional care needs in an IRF.
    Conversely, we also received comments from industry stakeholders 
stating that non-physician practitioners do have the necessary 
education and are qualified to provide the same level of care currently 
being provided to IRF patients by rehabilitation physicians. These 
commenters stated that non-physician practitioners are capable of 
performing the same tasks that the rehabilitation physicians currently 
must perform in IRFs. These commenters stated that non-physician 
practitioners have a history of treating complex patients across all 
settings, and are already doing so in IRFs. They also stated that the 
types of patient assessments that they would be required to do in the 
IRFs are the same types of assessments they are currently authorized to 
provide in other settings, such as inpatient hospitals, skilled nursing 
facilities, hospice, and outpatient rehabilitation centers. 
Additionally, commenters stated that because non-physician 
practitioners practice in conjunction with rehabilitation physicians in 
IRFs already, time spent practicing with rehabilitation physicians has 
provided many non-physician practitioners with direct rehabilitation 
experience to provide quality of care and services to IRF patients. 
Lastly, several commenters stated that non-physician practitioner 
educational programs include didactic and clinical experiences to 
prepare graduates for advanced clinical practice. These commenters 
stated that current accreditation requirements and competency-based 
standards ensure that non-physician practitioners are equipped to 
provide safe, high level quality care.
    Additionally, several commenters stated that allowing non-physician 
practitioners to practice to the full extent of their education, 
training, and scope of practice will increase the number of available 
health care providers able to work in the post-acute care setting 
resulting in lower costs and improved quality of care. Allowing the use 
of non-physician practitioners, authorized to provide care to the full 
extent of their states scope of practice, would also help offset 
deficiencies in physician supply, especially in rural areas. Physician 
burnout is also something that commenters suggested can occur overtime, 
and they commented that allowing the use of non-physician practitioners 
could potentially help decrease the rate at which physicians move on 
from providing care in IRFs.
    After carefully reviewing and taking all feedback that we received 
to our solicitation of comments into consideration, as section 5(c) of 
the October 3, 2019, Executive Order 13890 on Protecting and Improving 
Medicare for Our Nation's Seniors (84 FR 53573) instructed that we do, 
we have decided to propose to allow the use of non-physician 
practitioners to perform the IRF services and documentation 
requirements currently required to be performed by the rehabilitation 
physician in Sec.  412.622(a)(3), (4), and (5). We agree with 
commenters that non-physician practitioners have the training and 
experience to perform the IRF requirements, and believe that allowing 
IRFs to utilize non-physician practitioners practicing to their full 
scope of practice under applicable state law will increase access to 
post-acute care services specifically in rural areas, where 
rehabilitation physicians are often in short supply. We believe that 
alleviating access barriers to post-acute care services will improve 
the quality of care and lead to better patient outcomes in rural areas. 
We also agree with commenters that non-physician practitioners have the 
appropriate education and are capable of providing hospital level 
quality of care to complex IRF patients. Lastly, we believe that it 
continues to be the IRF's responsibility to exercise their best 
judgment regarding who has appropriate specialized training and 
experience, provided that these duties are within the practitioner's 
scope of practice under applicable state law.
    We are proposing to mirror our current definition of a 
rehabilitation physician with the proposed definition of a non-
physician practitioner in that we expect the IRF to determine whether 
the non-physician practitioner has specialized training and experience 
in inpatient rehabilitation and thus may perform any of the duties that 
are required to be performed by a rehabilitation physician, provided 
that the duties are within the non-physician practitioner's scope of 
practice under applicable state law.
    Therefore, we are proposing to add new Sec.  412.622(d) providing 
that for purposes of Sec.  412.622, a non-physician practitioner who is 
determined by the IRF to have specialized training and experience in 
inpatient rehabilitation may perform any of the duties that are 
required to be performed by a rehabilitation physician, provided that 
the duties are within the non-physician practitioner's scope of 
practice under applicable state law.
    Additionally, we note that if an IRF believes in any given 
situation a rehabilitation physician should have sole responsibility, 
or shared responsibility with non-physician practitioners, for 
overseeing a patient's care, the IRF should make that decision. 
Furthermore, IRFs are required to meet the hospital Conditions of 
Participation in section 1861(e) of the Act and in the regulations in 
part 482. Under section 1861(e)(4) of the Act and Sec.  482.12(c), 
every Medicare patient is generally required to be under the care of a 
physician.
    This proposal does not preclude IRFs from making decisions 
regarding the role of rehabilitation physicians or non-physician 
practitioners. We are merely proposing to allow non-physician 
practitioners to perform the IRF coverage requirements at Sec.  
412.622(a)(3), (4), and (5) that are currently required to be performed 
by a rehabilitation physician, provided that these duties are within 
the practitioner's scope of practice under applicable state law.
    We invite public comment on this proposal. Specifically, we invite 
commenters to comment on our analysis of this issue, and whether they 
have any other evidence to inform this analysis. We encourage 
commenters to share with us whether they believe that quality of care 
in IRFs will be impacted by this proposal, including any specific 
evidence that may help to inform this issue. We also request 
information from IRFs regarding whether or not their

[[Page 22090]]

facilities would allow non-physician practitioners to complete all of 
the requirements at Sec.  412.622(a)(3), (4), and (5), some of these 
requirements at Sec.  412.622(a)(3), (4), and (5), or none of the 
requirements at Sec.  412.622(a)(3), (4), and (5). This information 
will assist us in refining our estimates of the changes in Medicare 
payment that may result from this proposal.

X. Method for Applying the Reduction to the FY 2021 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 
the application of a 2-percentage point reduction of the applicable 
market basket increase factor for payments for discharges occurring 
during such FY for IRFs that fail to comply with the quality data 
submission requirements. In accordance with Sec.  412.624(c)(4)(i), we 
apply a 2-percentage point reduction to the applicable FY 2021 market 
basket increase factor in calculating an adjusted FY 2021 standard 
payment conversion factor to apply to payments for only those IRFs that 
failed to comply with the data submission requirements. As previously 
noted, application of the 2-percentage point reduction may result in an 
update that is less than 0.0 for a FY and in payment rates for a FY 
being less than such payment rates for the preceding FY. Also, 
reporting-based reductions to the market basket increase factor are not 
cumulative; they only apply for the FY involved.
    Table 12 shows the calculation of the proposed adjusted FY 2021 
standard payment conversion factor that would be used to compute IRF 
PPS payment rates for any IRF that failed to meet the quality reporting 
requirements for the applicable reporting period.

    Table 12--Calculations To Determine the Proposed Adjusted FY 2021
   Standard Payment Conversion Factor for IRFs That Failed To Meet the
                      Quality Reporting Requirement
------------------------------------------------------------------------
               Explanation for Adjustment                  Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2020..........         $16,489
Market Basket Increase Factor for FY 2021 (2.9 percent),         x 1.005
 reduced by 0.4 percentage point for the productivity
 adjustment as required by section 1886(j)(3)(C)(ii)(I)
 of the Act, and further reduced by 2 percentage points
 for IRFs that failed to meet the quality reporting
 requirement............................................
Budget Neutrality Factor for the Updates to the Wage            x 0.9999
 Index and Labor-Related Share..........................
Budget Neutrality Factor for the Revisions to the CMGs          x 0.9969
 and CMG Relative Weights...............................
Adjusted FY 2021 Standard Payment Conversion Factor.....       = $16,518
------------------------------------------------------------------------

XI. Collection of Information Requirements

    As discussed in section VIII. of this proposed rule, we are 
proposing to amend Sec.  412.622(a)(4)(i)(B) and (D) to codify our 
longstanding documentation instructions and guidance of the 
preadmission screening in regulation text. As per our discussion in the 
FY 2010 IRF PPS final rule (74 CR 39803), we do not believe that there 
is any burden associated with this requirement. The burden associated 
with this requirement is the time and effort put forth by the 
rehabilitation physician to document his or her concurrence with the 
pre-admission findings and the results of the pre-admission screening 
and retain the information in the patient's medical record. The burden 
associated with this requirement is in keeping with the ``Conditions of 
Participation: Medical record services,'' that are already applicable 
to Medicare participating hospitals. Therefore, we believe that this 
requirement reflects customary and usual business and medical practice. 
Thus, in accordance with section 1320.3(b)(2) of the Act, the burden is 
not subject to the PRA.
    As discussed in section VIII. of this proposed rule, we are 
proposing to remove the post-admission physician evaluation requirement 
at Sec.  412.622(a)(4)(ii) beginning with FY 2021, that is, for all IRF 
discharges beginning on or after October 1, 2020. Accordingly, we are 
proposing to amend Sec.  412.622(a)(3)(iv) to remove the reference to 
Sec.  412.622(a)(4)(ii). Additionally, we are making revisions to the 
requirements to allow non-physician practitioners to complete any of 
the IRF coverage requirements in Sec.  412.622(a)(3), (4), and (5) that 
we currently require a rehabilitation physician to fulfill, provided 
that these duties are within the practitioner's scope of practice under 
applicable state law. We discuss any potential cost savings from this 
proposal in the Overall Impact section of this proposed rule.

XII. 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.

XIII. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule would update the IRF prospective payment rates 
for FY 2021 as required under section 1886(j)(3)(C) of the Act and in 
accordance with section 1886(j)(5) of the Act, which requires the 
Secretary to publish in the Federal Register on or before the August 1 
before each FY, the classification and weighting factors for CMGs used 
under the IRF PPS for such FY and a description of the methodology and 
data used in computing the prospective payment rates under the IRF PPS 
for that FY. This proposed rule would also implement section 
1886(j)(3)(C) of the Act, which requires the Secretary to apply a MFP 
adjustment to the market basket increase factor for FY 2012 and 
subsequent years.
    Furthermore, this proposed rule would adopt policy changes under 
the statutory discretion afforded to the Secretary under section 
1886(j) of the Act. We are proposing to adopt the most recent OMB 
statistical area delineations and apply a 5 percent cap on any wage 
index decreases compared to FY 2020 in a budget neutral manner. We are 
also proposing to amend the IRF coverage requirements to remove the 
post-admission physician evaluation requirement and codify existing 
documentation instructions and guidance. Additionally, consistent with 
section 5(c) of Executive Order 13890, we are proposing to amend the 
IRF coverage requirements to allow non-physician practitioners to 
perform certain requirements that are currently

[[Page 22091]]

required to be performed by a rehabilitation physician.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), the Congressional 
Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing 
Regulation and Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in Executive Order 12866.
    We estimate the total impact of the policy updates described in 
this proposed rule by comparing the estimated payments in FY 2021 with 
those in FY 2020. This analysis results in an estimated $270 million 
increase for FY 2021 IRF PPS payments. We estimate that this rulemaking 
is ``economically significant'' as measured by the $100 million 
threshold, and hence also a major rule under the Congressional Review 
Act. Also, the rule has been reviewed by OMB. Accordingly, we have 
prepared an RIA that, to the best of our ability, presents the costs 
and benefits of the rulemaking.

C. Anticipated Effects

1. Effects on IRFs
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most IRFs and most other providers and 
suppliers are small entities, either by having revenues of $8.0 million 
to $41.5 million or less in any 1 year depending on industry 
classification, or by being nonprofit organizations that are not 
dominant in their markets. (For details, see the Small Business 
Administration's final rule that set forth size standards for health 
care industries, at 65 FR 69432 at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf, effective January 1, 2017 and updated on August 19, 2019.) Because 
we lack data on individual hospital receipts, we cannot determine the 
number of small proprietary IRFs or the proportion of IRFs' revenue 
that is derived from Medicare payments. Therefore, we assume that all 
IRFs (an approximate total of 1,120 IRFs, of which approximately 55 
percent are nonprofit facilities) are considered small entities and 
that Medicare payment constitutes the majority of their revenues. HHS 
generally uses a revenue impact of 3 to 5 percent as a significance 
threshold under the RFA. As shown in Table 13, we estimate that the net 
revenue impact of this proposed rule on all IRFs is to increase 
estimated payments by approximately 2.9 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 3.2 percent 
overall impact for rural IRFs. Additionally, we estimate a 3.1 percent 
overall impact for teaching IRFs with a resident to average daily 
census ratio of less than 10 percent, a 3.6 percent overall impact for 
teaching IRFs with resident to average daily census ratio of 10 to 19 
percent, and a 3.3 percent overall impact for teaching IRFs with a 
resident to average daily census ratio greater than 19 percent. Also, 
we estimate a 3.4 percent overall impact for IRFs with a DSH patient 
percentage of 0 percent and a 3.2 percent overall impact for IRFs with 
a DSH patient percentage greater than 20 percent. As a result, we 
anticipate this proposed rule would have a positive impact on a 
substantial number of small entities. MACs are not considered to be 
small entities. Individuals and states are not included in the 
definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 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 shown in Table 13, we estimate that the net revenue 
impact of this proposed rule on rural IRFs is to increase estimated 
payments by approximately 3.2 percent based on the data of the 132 
rural units and 11 rural hospitals in our database of 1,117 IRFs for 
which data were available. We estimate an overall impact for rural IRFs 
in all areas except Rural New England, Rural South Atlantic, and Rural 
East South Central of between 3.2 percent and 4.8 percent. As a result, 
we anticipate this proposed rule would have a positive impact on a 
substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-04, enacted March 22, 1995) (UMRA) also requires that agencies 
assess anticipated costs and benefits before issuing any rule whose 
mandates require spending in any 1 year of $100 million in 1995 
dollars, updated annually for inflation. In 2020, that threshold is 
approximately $156 million. This proposed rule does not mandate any 
requirements for State, local, or tribal governments, or for the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on state and 
local governments, preempts state law, or otherwise has federalism 
implications. As stated, this proposed rule will not have a substantial 
effect on state and local governments, preempt state law, or otherwise 
have a federalism implication.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.''

[[Page 22092]]

This proposed rule, if finalized as proposed, is expected to be a 
deregulatory action for the purposes of Executive Order 13771.
2. Detailed Economic Analysis
    This proposed rule would update the IRF PPS rates contained in the 
FY 2020 IRF PPS final rule (84 FR 39054). Specifically, this proposed 
rule would update the CMG relative weights and average length of stay 
values, the wage index, and the outlier threshold for high-cost cases. 
This proposed rule would apply a MFP adjustment to the FY 2021 IRF 
market basket increase factor in accordance with section 
1886(j)(3)(C)(ii)(I) of the Act. In addition, it includes proposals to 
adopt the most recent OMB statistical area delineations and apply a 
transition wage index under the IRF PPS. We are also proposing to amend 
the IRF coverage requirements to remove the post-admission physician 
evaluation requirement and codify existing documentation instructions 
and guidance. Additionally, consistent with section 5(c) of Executive 
Order 13890, we are proposing to amend the IRF coverage requirements to 
allow non-physician practitioners to perform certain requirements that 
are currently required to be performed by a rehabilitation physician.
    We estimate that the impact of the changes and updates described in 
this proposed rule would be a net estimated increase of $270 million in 
payments to IRF providers. This estimate does not include the 
implementation 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 section X. of this 
proposed rule). The impact analysis in Table 13 of this proposed rule 
represents the projected effects of the updates to IRF PPS payments for 
FY 2021 compared with the estimated IRF PPS payments in FY 2020. We 
determine the effects by estimating payments while holding all other 
payment variables constant. We use the best data available, but we do 
not attempt to predict behavioral responses to these changes, and we do 
not make adjustments for future changes in such variables as number of 
discharges or case-mix.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future-
oriented and, thus, susceptible to forecasting errors because of other 
changes in the forecasted impact time period. Some examples could be 
legislative changes made by the Congress to the Medicare program that 
would impact program funding, or changes specifically related to IRFs. 
Although some of these changes may not necessarily be specific to the 
IRF PPS, the nature of the Medicare program is such that the changes 
may interact, and the complexity of the interaction of these changes 
could make it difficult to predict accurately the full scope of the 
impact upon IRFs.
    In updating the rates for FY 2021, we are proposing standard annual 
revisions described in this proposed rule (for example, the update to 
the wage index and market basket increase factor used to adjust the 
Federal rates). We are also implementing a productivity adjustment to 
the FY 2021 IRF market basket increase factor in accordance with 
section 1886(j)(3)(C)(ii)(I) of the Act. We estimate the total increase 
in payments to IRFs in FY 2021, relative to FY 2020, would be 
approximately $270 million.
    This estimate is derived from the application of the FY 2021 IRF 
market basket increase factor, as reduced by a productivity adjustment 
in accordance with section 1886(j)(3)(C)(ii)(I) of the Act, which 
yields an estimated increase in aggregate payments to IRFs of $230 
million. Furthermore, there is an additional estimated $40 million 
increase in aggregate payments to IRFs due to the proposed updated to 
the outlier threshold amount. Therefore, summed together, we estimate 
that these updates will result in a net increase in estimated payments 
of $270 million from FY 2020 to FY 2021.
    The effects of the proposed updates that impact IRF PPS payment 
rates are shown in Table 13. 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 2.6 percent to 3.0 percent of 
total estimated payments for FY 2021, consistent with section 
1886(j)(4) of the Act.
     The effects of the proposed annual market basket update 
(using the IRF market basket) to IRF PPS payment rates, as required by 
sections 1886(j)(3)(A)(i) and (j)(3)(C) of the Act, including a 
productivity adjustment in accordance with section 1886(j)(3)(C)(i)(I) 
of the Act.
     The effects of applying the proposed budget-neutral labor-
related share and wage index adjustment, as required under section 
1886(j)(6) of the Act.
     The effects of the proposed budget neutral changes to the 
wage index due to the OMB delineation revisions and the transition wage 
index policy.
     The effects of the proposed budget-neutral changes to the 
CMG relative weights and average LOS values under the authority of 
section 1886(j)(2)(C)(i) of the Act.
     The total change in estimated payments based on the FY 
2021 payment changes relative to the estimated FY 2020 payments.
3. Description of Table 13
    Table 13 shows the overall impact on the 1,117 IRFs included in the 
analysis.
    The next 12 rows of Table 13 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 974 IRFs located in 
urban areas included in our analysis. Among these, there are 683 IRF 
units of hospitals located in urban areas and 291 freestanding IRF 
hospitals located in urban areas. There are 143 IRFs located in rural 
areas included in our analysis. Among these, there are 132 IRF units of 
hospitals located in rural areas and 11 freestanding IRF hospitals 
located in rural areas. There are 394 for-profit IRFs. Among these, 
there are 361 IRFs in urban areas and 33 IRFs in rural areas. There are 
610 non-profit IRFs. Among these, there are 521 urban IRFs and 89 rural 
IRFs. There are 113 government-owned IRFs. Among these, there are 92 
urban IRFs and 21 rural IRFs.
    The remaining four parts of Table 13 show IRFs grouped by their 
geographic location within a region, by teaching status, and by DSH 
patient percentage (PP). First, IRFs located in urban areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. Second, IRFs located in rural areas are 
categorized for their location within a particular one of the nine 
Census geographic regions. In some cases, especially for rural IRFs 
located in the New England, Mountain, and Pacific regions, the number 
of IRFs represented is small. IRFs are then grouped by teaching status, 
including non-teaching IRFs, IRFs with an intern and resident to 
average daily census (ADC) ratio less than 10 percent, IRFs with an 
intern and resident to ADC ratio greater than or equal to 10 percent 
and less than or equal to 19 percent, and IRFs with an intern and 
resident to ADC ratio greater than 19 percent. Finally, IRFs are 
grouped by DSH PP, including IRFs with zero DSH PP, IRFs with a

[[Page 22093]]

DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less than 
10 percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs with 
a DSH PP greater than 20 percent.
    The estimated impacts of each policy described in this rule to the 
facility categories listed are shown in the columns of Table 13. The 
description of each column is as follows:
     Column (1) shows the facility classification categories.
     Column (2) shows the number of IRFs in each category in 
our FY 2021 analysis file.
     Column (3) shows the number of cases in each category in 
our FY 2021 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 labor-related share and wage index, in a budget-
neutral manner.
     Column (6) shows the estimated effect of the proposed 
revisions to the CBSA delineations and the transition wage index, in a 
budget-neutral manner.
     Column (7) shows the estimated effect of the proposed 
update to the CMG relative weights and average LOS values, in a budget-
neutral manner.
     Column (8) compares our estimates of the payments per 
discharge, incorporating all of the policies reflected in this proposed 
rule for FY 2021 to our estimates of payments per discharge in FY 2020.
    The average estimated increase for all IRFs is approximately 2.9 
percent. This estimated net increase includes the effects of the 
proposed IRF market basket increase factor for FY 2021 of 2.9 percent, 
reduced by a productivity adjustment of 0.4 percentage point in 
accordance with section 1886(j)(3)(C)(ii)(I) of the Act. It also 
includes the approximate 0.4 percent overall increase in estimated IRF 
outlier payments from the proposed update to the outlier threshold 
amount. Since we are making the updates to the IRF wage index, labor-
related share and the CMG relative weights in a budget-neutral manner, 
they will 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.
BILLING CODE 4120-01-P

[[Page 22094]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.007

BILLING CODE 4120-01-C
4. Impact of the Proposed Update to the Outlier Threshold Amount
    The estimated effects of the proposed update to the outlier 
threshold adjustment are presented in column 4 of Table 13. In the FY 
2020 IRF PPS final rule (84 FR 39095 through 39097), we used FY 2018 
IRF claims data (the best, most complete data available at that time) 
to set the outlier threshold amount for FY 2020 so that estimated 
outlier payments would equal 3 percent of total estimated payments for 
FY 2020.
    For this proposed rule, we are using preliminary FY 2019 IRF claims 
data, and, based on that preliminary analysis, we estimated that IRF 
outlier payments as a percentage of total estimated IRF payments would 
be 2.6 percent in FY 2020. Thus, we propose to adjust the outlier 
threshold amount in this proposed rule to maintain total estimated 
outlier payments equal to 3 percent of total estimated payments in FY 
2021. The estimated change in total

[[Page 22095]]

IRF payments for FY 2021, therefore, includes an approximate 0.4 
percent increase in payments because the estimated outlier portion of 
total payments is estimated to increase from approximately 2.6 percent 
to 3 percent.
    The impact of this proposed outlier adjustment update (as shown in 
column 4 of Table 13) is to increase estimated overall payments to IRFs 
by 0.4 percent.
5. Impact of the Proposed Wage Index and Labor-Related Share
    In column 5 of Table 13, 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 are proposing to update the 
labor-related share from 72.7 percent in FY 2020 to 72.9 percent in FY 
2021.
6. Impact of the Proposed Revisions to the OMB Delineations and the 
Proposed 5 percent Cap Transition Policy
    In column 6 of Table 13, we present the effects of the proposed 
budget-neutral update of the geographic labor-market area designations 
under the IRF PPS and the proposed application of the 5 percent cap on 
any decrease in an IRF's wage index for FY 2021 from the prior FY. As 
discussed in section V.D.2. of this proposed rule, we are proposing to 
implement the new OMB delineations as described in the September 14, 
2018 OMB Bulletin No. 18-04, effective beginning with the FY 2021 IRF 
PPS wage index. Additionally, as discussed in section V.D.3. of this 
proposed rule, we are proposing to apply a 5 percent cap on any 
decrease in an IRF's wage index from the prior FY to help mitigate any 
significant negative impacts that IRFs may experience due to our 
proposal to adopt the revised OMB delineations under the IRF PPS.
7. Impact of the Proposed Update to the CMG Relative Weights and 
Average LOS Values
    In column 7 of Table 13, we present the effects of the proposed 
budget-neutral update of the CMG relative weights and average LOS 
values. In the aggregate, we do not estimate that these proposed 
updates will affect overall estimated payments of IRFs. However, we do 
expect these updates to have small distributional effects.
8. Effects of the Proposal To Remove the Post-Admission Physician 
Evaluation
    As discussed in section VII. of this proposed rule, we are 
proposing to remove Sec.  412.622(a)(4)(ii) that requires an IRF to 
complete a post-admission physician evaluation for all patients 
admitted to the IRF, beginning with FY 2021, that is, for all IRF 
discharges beginning on or after October 1, 2020.
    We do not estimate that there will be a cost savings associated 
with our proposal to remove the post-admission physician evaluation, as 
discussed in section VII. of this proposed rule. While we are proposing 
to remove the post-admission physician requirement at Sec.  
412.622(a)(4)(ii), we are not proposing to remove any of the required 
rehabilitation physician face-to-face visits in Sec.  
412.622(a)(3)(iv). Thus, the rehabilitation physician or, if the 
proposed policy changes in section XI. of this proposed rule are 
finalized, non-physician practitioners would still be required to 
conduct face-to-face visits with the patient at least 3 days per week 
throughout the patient's stay in the IRF. Since the proposal does not 
decrease the amount of times the physician is required to visit and 
assess the patient, we do not estimate any cost savings to the IRF with 
this proposal.
9. Effects of the Proposal To Allow Non-Physician Practitioners To 
Perform Certain IRF Coverage Requirements That Are Currently Required 
To Be Performed by a Rehabilitation Physician
    As discussed in section IX. of this proposed rule, we are proposing 
to allow non-physician practitioners to perform any of the IRF coverage 
requirements at Sec.  412.622(a)(3), (4), and (5) that are currently 
required to be performed by a rehabilitation physician, provided that 
these duties are within the practitioner's scope of practice under 
applicable state law. While we do not know how many states will allow 
for this flexibility, we would appreciate information from commenters 
that would help us analyze the impact of this provision for the final 
rule. We believe this proposal represents a significant decrease in 
administrative burden to rehabilitation physicians and providers 
beginning in FY 2021, that is, all IRF discharges on or after October 
1, 2020. We estimate the cost savings associated with this proposed 
change in the following way.
    These requirements must currently be fulfilled by a rehabilitation 
physician; therefore, to estimate the burden reduction of these 
proposed changes, we obtained the hourly wage rate for a physician 
(there was not a specific wage rate for a rehabilitation physician) 
from the Bureau of Labor Statistics (https://www.bls.gov/ooh/healthcare/home.htm) to be $100.00. The hourly wage rate including fringe benefits 
and overhead is $200.00. We also obtained the average hourly wage rate 
for a non-physician practitioner. As discussed in section IX. of this 
proposed rule, we defer to each state's scope of practice in 
determining who is recognized as a non-physician practitioner; however, 
for the purposes of this burden reduction estimation, we used a 
combined average wage from the Bureau of Labor Statistics, for a nurse 
practitioner and a physician's assistant as the Executive Order 
specifically identifies both of these practitioners, which is $53.50. 
The hourly wage rate including fringe benefits and overhead is $107.00.
    We estimate that the pre-admission screening documentation review 
and compliance requirement at Sec.  412.622(a)(3) takes approximately 
10 minutes to complete. In FY 2019, we estimate that there were 
approximately 1,117 total IRFs and on average 366 discharges per IRF 
annually. Therefore, there were an estimated seven patients (366 
discharges/52 weeks) at the IRF per week. Per IRF, the rehabilitation 
physician spends 61 hours (10 minutes x 366 discharges/60 minutes) 
annually reviewing and concurring with the pre-admission screening. 
Allowing a non-physician practitioner to complete the review and 
concurrence of the pre-admission screening, we estimate a reduction of 
68,137 hours for rehabilitation physicians across all IRFs annually 
(1,117 IRFs x 61 hours).
    To estimate the total cost savings per IRF annually, assuming the 
IRF was able and wanted to take maximum use of this regulatory 
provision, we multiply 61 hours by $200.00 (average physician's salary 
doubled to account for fringe and overhead costs) which equals $12,200. 
We then multiply 61 hours by $107.00 (average non-physician 
practitioners salary doubled to account for fringe and overhead costs) 
which equals $6,527. We then subtract the non-physician practitioners 
total cost from the rehabilitation physicians total cost to get an 
estimated total cost savings per IRF of $5,673 annually. Therefore, we 
can estimate the total cost savings across all IRFs annually for non-
physician practitioners to complete the pre-admission screening would 
be $6 million ($5,673 x 1,117).
    Next we estimate that the development of the patient's plan of care 
requirement at Sec.  412.622(a)(4)(iii) takes approximately 1 hour to 
complete. The rehabilitation physician spends 366 hours (1 hour x 366 
discharges)

[[Page 22096]]

annually per IRF developing plans of care. Allowing a non-physician 
practitioner to complete the plan of care for each patient, we estimate 
a reduction of 408,822 hours for rehabilitation physicians across all 
IRFs annually (1,117 IRFs x 366 hours).
    To estimate the total cost savings per IRF annually, assuming the 
IRF was able and wanted to take maximum use of this regulatory 
provision, we multiply 366 hours by $200.00 (average physician's salary 
doubled to account for fringe and overhead costs) which equals $73,200. 
We then multiply 366 hours by $107.00 (average non-physician 
practitioners salary doubled to account for fringe and overhead costs) 
which equals $39,162. The total estimated cost savings per IRF is 
$34,038 ($73,200-$39,162). Therefore, we can estimate the total cost 
savings across all IRFs annually for non-physician practitioners to 
develop each patient's plan of care would be $38 million ($34,038 x 
1,117).
    Lastly, we estimate that during the interdisciplinary team meeting 
requirement at Sec.  412.622(a)(5) that is led by the rehabilitation 
physician weekly, each patient is discussed for an estimated 15 
minutes. The average length of stay of an IRF patient is 14 days; 
therefore, each patient will be discussed at the interdisciplinary 
teaming meeting for an estimated total of 30 minutes. The 
rehabilitation physician spends 183 hours (30 minutes x 366 discharges/
60 minutes) annually discussing IRF patients at the interdisciplinary 
team meeting. Allowing a non-physician practitioner to lead the 
interdisciplinary team meeting, we estimate a reduction of 204,441 
hours for rehabilitation physicians across all IRFs annually (1,117 
IRFs x 183 hours).
    To estimate the total cost savings per IRF annually, assuming the 
IRF was able and wanted to take maximum use of this regulatory 
provision, we multiply 183 hours by $200.00 (average physician's salary 
doubled to account for fringe and overhead costs) which equals $36,600. 
We then multiply 183 hours by $107.00 (average non-physician 
practitioners salary doubled to account for fringe and overhead costs) 
which equals $19,581. The total estimated cost savings per IRF is 
$17,019 ($36,600-$19,581). Therefore, we can estimate the total cost 
savings across all IRFs annually for non-physician practitioners to 
lead the interdisciplinary team meeting would be $19 million ($17,019 x 
1,117).
    We estimate that the overall cost savings per IRF annually assuming 
the IRF was able and wanted to take maximum use of this regulatory 
provision, for a non-physician practitioner to fulfill the requirements 
of the rehabilitation physician to be $56,730 ($5,673 + $34,038 + 
17,019). Therefore, the estimated total cost savings across all IRFs 
annually for allowing non-physician practitioners to fulfill the 
requirements of the rehabilitation physician in an IRF setting is $63 
million.
    Please note that the $63 million in burden reduction described 
above will not solely be savings to the Medicare Trust Fund. We note 
that all of the cost savings reflected in this estimate will occur on 
the Medicare Part B side, in the form of reduced Part B payments to 
physicians under the Medicare Physician Fee Schedule (MPFS). Physician 
services provided in an IRF are billed directly to Part B; therefore, 
IRFs do not pay physicians for their services. Therefore, the Medicare 
Trust Fund will be saving 80 percent of the overall cost savings and 20 
percent of the savings will be to beneficiaries due to the coinsurance 
requirement generally applicable to Medicare Part B services. We 
estimate that if 100 percent of IRFs allowed non-physician 
practitioners to fulfill the requirements at Sec.  412.622(a)(3), (4), 
and (5) the overall savings to Medicare Part B would be $51 million. 
However, we do not believe that IRFs will adopt this proposed change 
for all of the services they provide. We are estimating that IRFs will 
adopt this proposed change for about 50 percent of the services 
provided (and request comment that would allow for refinement of this 
estimate). Therefore, we estimate that the overall savings to the 
Medicare Trust Fund for allowing non-physician practitioners to fulfill 
the rehabilitation requirements at Sec.  412.622(a)(3), (4), and (5) 
would be $25.5 million.
    We have also estimated the impacts of this proposed change using 
the MPFS regarding what a physician would bill for these services 
versus what a non-physician practitioner would bill. The MPFS provides 
more than 10,000 physician services, the associated relative value 
units, a fee schedule state indicator and various payment policy 
indicators needed for payment adjustment. The MPFS pricing amounts are 
adjusted to reflect the variation in practice costs from area to area. 
For additional information regarding how to use the MPFS please visit 
the website at https://www.cms.gov/apps/physician-fee-schedule/search/search-criteria.aspx.
    The post-admission physician evaluation and the face-to-face 
physician visits are considered separately payable services for 
physicians. Therefore, we can use the active pricing paid in calendar 
year 2020 for a national base payment. The interdisciplinary team 
meeting is not payable separately which means that the payments to 
physicians for their time spent conducting the interdisciplinary team 
meeting are already bundled and included with an existing service.
    There are different evaluation and management codes depending on 
the complexity of the patient and the duration of the visit. The 
current evaluation and management codes and national pricing for the 
post-admission physician evaluation in a facility are 99221 ($103.94), 
99222 ($140.39), or 99223 ($206.07). For the sake of this estimation, 
we have used an average of these 3 codes. Therefore, we estimate that 
the average national pricing which is a standard reference payment 
amount for physicians without geographic adjustment for the post-
admission physician evaluation in a facility is $150.13. Similarly, the 
current evaluation and management codes for the face-to-face visit in a 
facility are 99231 ($40.06), 99232 ($73.62), or 99233 ($106.10). 
Therefore, we estimate that the average national pricing which is a 
standard reference payment amount for the physicians without geographic 
adjustment for one of the face-to-face visits in a facility is $73.26. 
Since the physician is required to conduct at a minimum of 3 face-to-
face visits per the requirement at Sec.  412.622(a)(3)(iv) the 
estimated total for 3 face-to-face visits is $219.78.
    Therefore, we estimate that physicians are currently billing 
$369.91 per IRF patient for the post-admission physician evaluation and 
the minimum of 3 face-to-face visits currently required to be fulfilled 
by a physician. In FY 2019, we estimate that there were approximately 
1,117 total IRFs and on average 366 discharges per IRF annually. 
Therefore, we estimate that on average each year physicians are billing 
$151 million for these services.
    According to the Medicare Benefit Policy Manual, chapter 15, 
section 80 (Pub. 100-02), as well as, the IRF PPS website (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf), non-physician practitioners are able to bill 80 percent 
of what physicians bill. Therefore, we estimate that on average non-
physician practitioners would bill $120.10 for the post-admission 
physician evaluation and an estimated $58.61 per face-to-face visit (a 
minimum of 3 visits would be $175.82). Per IRF patient the non-
physician practitioner would bill an estimated $295.92. Therefore, we 
estimate that on average each year a non-physician practitioner

[[Page 22097]]

would bill $121 million for these services.
    We estimate that if 100 percent of IRFs allowed non-physician 
practitioners to fulfill the requirements at Sec.  412.622(a)(3), (4), 
and (5) the overall savings to Medicare Part B would be $31 million. 
However, we do not believe that IRFs will adopt this proposed change 
for all of the services they provide. We are estimating that IRFs will 
adopt this proposed change for about 50 percent of the services 
provided. To obtain more information on which to base our estimates, we 
are soliciting feedback from commenters to determine:
     How many IRFs would substitute non-physician practitioners 
for physicians; and
     Among the IRFs that do substitute non-physician 
practitioners for physicians, whether it will be for all requirements 
or only for specific requirements.
    In the absence of specific information on which to base a specific 
estimate of how much IRFs would be expected to substitute non-physician 
practitioners for physicians under this proposed policy, we are 
assuming that IRFs would adopt this proposal for about 50 percent of 
the requirements. Thus, the estimated overall savings to Medicare Part 
B would be $15.5 million. We are estimating that 80 percent of that 
would remain in the Medicare Trust Fund and 20 percent would be a 
savings to beneficiaries. Therefore, we estimate $12.4 million in 
savings to the Medicare program and $3.1 million in savings to 
beneficiaries.

D. Alternatives Considered

    The following is a discussion of the alternatives considered for 
the 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.
    As noted previously in this proposed rule, section 
1886(j)(3)(C)(ii)(I) of the Act requires the Secretary to apply a 
productivity adjustment to the market basket increase factor for FY 
2021. Thus, in accordance with section 1886(j)(3)(C) of the Act, we 
propose to update the IRF prospective payments in this proposed rule by 
2.5 percent (which equals the 2.9 percent estimated IRF market basket 
increase factor for FY 2021 reduced by a 0.4 percentage point 
productivity adjustment as determined under section 
1886(b)(3)(B)(xi)(II) of the Act (as required by section 
1886(j)(3)(C)(ii)(I) of the Act)).
    We considered maintaining the existing CMG relative weights and 
average length of stay values for FY 2021. 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 not implementing the new OMB delineations for 
purposes of calculating the wage index under the IRF PPS; however, we 
believe implementing the new OMB delineations would result in wage 
index values being more representative of the actual costs of labor in 
a given area.
    We considered having no transition period and fully implementing 
the proposed revisions to the OMB delineations as described in section 
V.D. of this proposed rule. However, this would not provide any time 
for IRF providers to adapt to their new wage index values. Thus, we 
believe that it would be appropriate to provide for a transition period 
to mitigate any significant decreases in wage index values and to 
provide time for IRFs to adjust to their new labor market area 
delineations.
    We considered using a blended wage index for all providers that 
would be computed using 50 percent of the FY 2021 IRF PPS wage index 
values under the FY 2020 CBSA delineations and 50 percent of the FY 
2021 IRF PPS wage index values under the FY 2021 OMB delineations as 
was utilized in FY 2016 when we adopted the new CBSA delineations based 
on the 2010 decennial census. However, the revisions to the CBSA 
delineations announced in the latest OMB bulletin are not based on new 
census data; they are updates of the CBSA delineations adopted in FY 
2016 based on the 2010 census data. As such, we do not believe it is 
necessary to implement the multifaceted 50/50 blended wage index 
transition that we established for the adoption of the new OMB 
delineations based on the decennial census data in FY 2016.
    We considered transitioning the wage index to the revised OMB 
delineations over a number of years to minimize the impact of the 
proposed wage index changes in a given year. However, we also believe 
this must be balanced against the need to ensure the most accurate 
payments possible, which argues for a faster transition to the revised 
OMB delineations. As discussed above in section V.D. of this proposed 
rule, we believe that using the most current OMB delineations would 
increase the integrity of the IRF PPS wage index by creating a more 
accurate representation of geographic variation in wage levels. As 
such, we believe it would be appropriate to utilize a 5 percent cap on 
any decrease in an IRF's wage index from the IRF's final wage index in 
FY 2020 to allow the effects of our proposed policies to be phased in 
over 2 years.
    We considered maintaining the existing outlier threshold amount for 
FY 2021. However, analysis of updated FY 2019 data indicates that 
estimated outlier payments would be less than 3 percent of total 
estimated payments for FY 2021, by approximately 0.4 percent, unless we 
updated the outlier threshold amount. Consequently, we propose 
adjusting the outlier threshold amount in this proposed rule to reflect 
a 0.4 percent increase thereby setting the total outlier payments equal 
to 3 percent, instead of 2.6 percent, of aggregate estimated payments 
in FY 2021.
    We considered not removing the post-admission physician evaluation 
requirement at Sec.  412.622(a)(3)(iv). However, we believe that IRFs 
are more than capable of determining whether a patient meets the 
coverage criteria for IRF services prior to admission. Additionally, we 
believe that if IRFs are doing their due diligence while completing the 
pre-admission screening by making sure each IRF candidate meets all of 
the requirements to be admitted to the IRF, then the post-admission 
physician evaluation is unnecessary.
    We considered not amending Sec.  412.622(a)(4)(i)(B) and (D) to 
codify our longstanding documentation instructions and guidance of the 
preadmission screening in regulation text. However, we believe for the 
ease of administrative burden and being able to locate the required 
elements of the preadmission screening documentation and the review and 
concurrence of a rehabilitation physician prior to the IRF admission 
needed for the basis of IRF payment in a timely fashion, we are should 
make the technical codifications in regulation text.
    We considered not amending Sec.  412.622(a)(3), (4), and (5) to 
allow non-physician practitioners to complete any of the IRF coverage 
requirements that we currently require a rehabilitation physician to 
fulfill. However, the non-physician practitioner groups stated that

[[Page 22098]]

they have the necessary education and are qualified to provide the same 
level of care currently being provided to IRF patients by 
rehabilitation physicians. They also stated that non-physician 
practitioners have a history of treating complex patients across all 
settings, and are already doing so in IRFs. They also stated that the 
types of patient assessments that they would be required to do in the 
IRFs are the same types of assessments they are currently authorized to 
provide in other settings, such as inpatient hospitals, skilled nursing 
facilities, hospice, and outpatient rehabilitation centers. 
Additionally, they also stated that they have direct rehabilitation 
experience to provide quality of care and services to IRF patients, 
that non-physician practitioner educational programs include didactic 
and clinical experiences to prepare graduates for advanced clinical 
practice, and that current accreditation requirements and competency-
based standards ensure that non-physician practitioners are equipped to 
provide safe, high level quality care.
    Furthermore, we believe that allowing non-physician practitioners 
to practice to the full extent of their education, training, and scope 
of practice would increase the number of available health care 
providers able to work in the post-acute care setting, resulting in 
lower costs and improved quality of care. Allowing the use of non-
physician practitioners, authorized to provide care to the full extent 
of their states scope of practice, would also help offset deficiencies 
in physician supply, especially in rural areas. In addition, we believe 
that allowing the use of non-physician practitioners could reduce the 
rates of rehabilitation physician burn-out. We reviewed this 
information, as we were instructed to do by section 5(c) of Executive 
Order 13890, and we believe it is appropriate at this time to propose 
to allow non-physician practitioners to complete any of the IRF 
coverage requirements that we currently require a rehabilitation 
physician to fulfill.

E. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on the FY 2020 IRF PPS proposed rule would be the number of 
reviewers of this proposed rule. We acknowledge that this assumption 
may understate or overstate the costs of reviewing this proposed rule. 
It is possible that not all commenters reviewed the FY 2020 IRF PPS 
proposed rule in detail, and it is also possible that some reviewers 
chose not to comment on the proposed rule. For these reasons we thought 
that the number of past commenters would be a fair estimate of the 
number of reviewers of this proposed rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this proposed rule, 
and therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule. We sought comments 
on this assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $109.36 per hour, including overhead and fringe benefits 
(https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average 
reading speed, we estimate that it would take approximately 2 hours for 
the staff to review half of this proposed rule. For each IRF that 
reviews the rule, the estimated cost is $218.72 (2 hours x $109.36). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $274,931.04 ($218.72 x 1,257 reviewers).

F. Accounting Statement and Table

    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 14, we have prepared an accounting statement showing 
the classification of the expenditures associated with the provisions 
of this proposed rule. Table 14 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 
1,117 IRFs in our database.

 Table 14--Accounting Statement: Classification of Estimated Expenditure
------------------------------------------------------------------------
                                       Category            Transfers
                                 ---------------------------------------
  Change in Estimated Transfers       Annualized         $270 million.
 from FY 2020 IRF PPS to FY 2021       Monetized     -------------------
             IRF PPS                   Transfers      Federal Government
                                 --------------------   to IRF Medicare
                                  From Whom to Whom?      Providers.
------------------------------------------------------------------------
Change in Estimated Costs
------------------------------------------------------------------------
                       Category                             Costs.
------------------------------------------------------------------------
Annualized monetized cost in FY         Reduction of $15.5 million.
 2021 for IRFs due to the
 removal of certain IRF coverage
 requirements.
------------------------------------------------------------------------

G. Conclusion

    Overall, the estimated payments per discharge for IRFs in FY 2021 
are projected to increase by 2.9 percent, compared with the estimated 
payments in FY 2020, as reflected in column 9 of Table 13.
    IRF payments per discharge are estimated to increase by 2.9 percent 
in urban areas and 3.2 percent in rural areas, compared with estimated 
FY 2020 payments. Payments per discharge to rehabilitation units are 
estimated to increase 3.3 percent in urban areas and 3.4 percent in 
rural areas. Payments per discharge to freestanding rehabilitation 
hospitals are estimated to increase 2.6 percent in urban areas and 
increase 2.5 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 4.8 percent increase 
for rural IRFs located in the Pacific region. The analysis above, 
together with the remainder of this preamble, provides an RIA.

[[Page 22099]]

    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by OMB.

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 set forth 
below:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

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

    Authority:  42 U.S.C. 1302 and 1395hh.

0
2. Section 412.622 is amended--
0
a. By revising paragraphs (a)(3)(ii) and (iv) and (a)(4)(i)(B) and (D);
0
b. By removing paragraph (a)(4)(ii);
0
c. By redesignating paragraph (a)(4)(iii) as paragraph (a)(4)(ii); and
0
d. In paragraph (c) by adding the definition of ``Week'' in 
alphabetical order; and
0
e. By adding paragraph (d).
    The revisions and addition read as follows:


Sec.  412.622  Basis of payment.

    (a) * * *
    (3) * * *
    (ii) Generally requires and can reasonably be expected to actively 
participate in, and benefit from, an intensive rehabilitation therapy 
program. Under current industry standards, this intensive 
rehabilitation therapy program generally consists of at least 3 hours 
of therapy (physical therapy, occupational therapy, speech-language 
pathology, or prosthetics/orthotics therapy) per day at least 5 days 
per week. In certain well-documented cases, this intensive 
rehabilitation therapy program might instead consist of at least 15 
hours of intensive rehabilitation therapy per week. Benefit from this 
intensive rehabilitation therapy program is demonstrated by measurable 
improvement that will be of practical value to the patient in improving 
the patient's functional capacity or adaptation to impairments. The 
required therapy treatments must begin within 36 hours from midnight of 
the day of admission to the IRF.
* * * * *
    (iv) Requires physician supervision by a rehabilitation physician. 
The requirement for medical supervision means that the rehabilitation 
physician must conduct face-to-face visits with the patient at least 3 
days per week throughout the patient's stay in the IRF to assess the 
patient both medically and functionally, as well as to modify the 
course of treatment as needed to maximize the patient's capacity to 
benefit from the rehabilitation process, except that during a Public 
Health Emergency, as defined in Sec.  400.200 of this chapter, such 
visits may be conducted using telehealth services (as defined in 
section 1834(m)(4)(F) of the Act).
    (4) * * *
    (i) * * *
    (B) It includes a detailed and comprehensive review of each 
patient's condition and medical history, including the patient's level 
of function prior to the event or condition that led to the patient's 
need for intensive rehabilitation therapy, expected level of 
improvement, and the expected length of time necessary to achieve that 
level of improvement; an evaluation of the patient's risk for clinical 
complications; the conditions that caused the need for rehabilitation; 
the treatments needed (that is, physical therapy, occupational therapy, 
speech-language pathology, or prosthetics/orthotics); expected 
frequency and duration of treatment in the IRF; anticipated discharge 
destination; and anticipated post-discharge treatments.
* * * * *
    (D) It is used to inform a rehabilitation physician who reviews and 
documents his or her concurrence with the findings and results of the 
preadmission screening prior to the IRF admission.
* * * * *
    (c) * * *
    Week means a period of 7 consecutive calendar days beginning with 
the date of admission to the IRF.
    (d) Non-physician practitioners. For purposes of this section, a 
non-physician practitioner who is determined by the IRF to have 
specialized training and experience in inpatient rehabilitation may 
perform any of the duties that are required to be performed by a 
rehabilitation physician, provided that the duties are within the non-
physician practitioner's scope of practice under applicable state law.

    Dated: March 24, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 9, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-08359 Filed 4-16-20; 4:15 pm]
 BILLING CODE 4120-01-P