Federal Register, Volume 85 Issue 154 (Monday, August 10, 2020)

[Federal Register Volume 85, Number 154 (Monday, August 10, 2020)]
[Rules and Regulations]
[Pages 48424-48463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17209]

[[Page 48423]]

Vol. 85

Monday,

No. 154

August 10, 2020

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 412

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

Federal Register / Vol. 85, No. 154 / Monday, August 10, 2020 / Rules
and Regulations

[[Page 48424]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1729-F]
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: Final rule.

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SUMMARY: This final rule updates the prospective payment rates for
inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY)
2021. As required by statute, this final 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. This
final rule adopts more recent Office of Management and Budget
statistical area delineations and applies a 5 percent cap on any wage
index decreases compared to FY 2020 in a budget neutral manner. This
final rule also amends the IRF coverage requirements to remove the
post-admission physician evaluation requirement and codifies existing
documentation instructions and guidance. In addition, this final rule
amends the IRF coverage requirements to allow, beginning with the
second week of admission to the IRF, a non-physician practitioner who
is determined by the IRF to have specialized training and experience in
inpatient rehabilitation to conduct 1 of the 3 required face-to-face
visits with the patient per week, provided that such duties are within
the non-physician practitioner's scope of practice under applicable
state law.

DATES: These regulations are effective on October 1, 2020.
Applicability dates: The updated IRF prospective payment rates are
applicable for IRF discharges occurring on or after October 1, 2020,
and on or before September 30, 2021 (FY 2021).

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.

SUPPLEMENTARY INFORMATION:

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 final 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 final rule updates 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 final 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. This final rule
adopts more recent Office of Management and Budget (OMB) statistical
area delineations and applies a 5 percent cap on any wage index
decreases compared to FY 2020 in a budget neutral manner. This final
rule also amends the IRF coverage requirements to remove the post-
admission physician evaluation requirement and codifies existing
documentation instructions and guidance. In addition, this final rule
amends the IRF coverage requirements to allow, beginning with the
second week of admission to the IRF, a non-physician practitioner who
is determined by the IRF to have specialized training and experience in
inpatient rehabilitation to conduct 1 of the 3 required face-to-face
visits with the patient per week, provided that such duties are within
the non-physician practitioner's scope of practice under applicable
state law. There are no updates in this final rule to the IRF Quality
Reporting Program (QRP).

B. Waiver of the 60-Day Delayed Effective Date for the Final Rule

The United States is responding to an outbreak of respiratory
disease caused by a novel (new) coronavirus that has now been detected
in more than 190 locations internationally, including in all 50 States
and the District of Columbia. The virus has been named ``SARS-CoV-2''
and the disease it causes has been named ``coronavirus disease 2019''
(abbreviated ``COVID-19'').
Due to CMS prioritizing efforts in support of containing and
combatting the COVID-19 PHE, and devoting significant resources to that
end, as discussed and for the reasons discussed in section XIII. of
this final rule, we are hereby waiving the 60-day requirement and
determining that the IRF PPS final rule will take effect 55 days after
issuance.

C. Summary of Major Provisions

In this final 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.
This final rule adopts more recent OMB statistical area delineations
and applies a 5 percent cap on any wage index decreases compared to FY
2020 in a budget neutral manner. This final rule also amends the IRF
coverage requirements to remove the post-admission physician evaluation
requirement and codifies existing documentation instructions and
guidance. In addition, this final rule amends the IRF coverage
requirements to allow non-physician practitioners to perform some of
the weekly visits, provided that such duties are within the non-
physician practitioner's scope of practice under applicable state law.

D. Summary of Impact

[[Page 48425]]

Table 1--Cost and Benefit
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Provision description Transfers
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FY 2021 IRF PPS payment rate The overall economic impact of this final
update. rule is an estimated $260 million in
increased payments from the Federal
Government to IRFs during FY 2021.
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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 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 final
rule also includes the provisions effective in the correcting
amendments. For a detailed discussion of the final key policy changes
for FY 2006, please refer to the FY 2006 IRF PPS final rule.
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=/InpatientRehabFacPPS/.

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
final 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 VI.B. of this final rule. Section
1886(j)(3)(C)(ii)(II) of the Act provides that the application of the
productivity adjustment to the market basket update may result in an
update that is less than 0.0 for a FY and in payment rates for a FY
being less than such payment rates for the preceding FY.

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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 on
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 http://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 on August 21, 1996)--
compliant electronic claim or, if the Administrative Simplification
Compliance Act of 2002 (ASCA) (Pub. L. 107-105, enacted on December 27,
2002) permits, a paper claim (a UB-04 or a CMS-1450 as appropriate)
using the five-character CMG number and sends it to the appropriate
Medicare Administrative Contractor (MAC). In addition, once a MA
patient is discharged, in accordance with the Medicare Claims
Processing Manual, chapter 3, section 20.3 (Pub. L. 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
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 http://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 http://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

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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.
On May 1 2020, ONC and CMS published the final rules, ``21st
Century Cures Act: Interoperability, Information Blocking, and the ONC
Health IT Certification Program,'' \1\ (85 FR 25642) and ``Patient
Access and Interoperability'' \2\ (85 FR 25510) to promote secure and
more immediate access to health information for patients and healthcare
providers through the use of standards-based application programming
interfaces (APIs) that enable easier access to electronic health
information. The CMS Interoperability and Patient Access rule also
finalizes a new regulation under the Conditions of Participation for
hospitals (85 FR 25584), including CAHs and psychiatric hospitals,
which will require these providers to send electronic patient event
notifications of a patient's admission, discharge, and/or transfer to
appropriate recipients, including applicable post-acute care providers
and suppliers. These notifications can help alert post-acute care
providers and suppliers when a patient has been seen in the ED or
admitted to the hospital, supporting more effective care coordination
across settings. We invite providers to learn more about these
important developments and how they are likely to affect IRFs.
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\1\ https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-07419.pdf.
\2\ https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-05050.pdf.
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III. Summary of Provisions of the Proposed Rule

In the FY 2021 IRF PPS proposed rule, we proposed to update the IRF
prospective payment rates for FY 2021. We also proposed to adopt more
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 also proposed to amend the IRF
coverage requirements to remove the post-admission physician evaluation
requirement and codify existing documentation instructions and
guidance. Additionally, we proposed 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.
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 the FY 2021 IRF PPS proposed rule (85 FR 22065, 22069 through
22073).
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
the FY 2021 IRF PPS proposed rule (85 FR 22065, 22073 through 22075).
Adopt 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
the FY 2021 IRF PPS proposed rule (85 FR 22065, 22075 through 22080).
Describe the calculation of the IRF standard payment
conversion factor for FY 2021, as discussed in section V. of the FY
2021 IRF PPS proposed rule (85 FR 22065, 22080 through 22081).
Update the outlier threshold amount for FY 2021, as
discussed in section VI. of the FY 2021 IRF PPS proposed rule (85 FR
22065, 22084 through 22085).
Update the cost-to-charge ratio (CCR) ceiling and urban/
rural average CCRs for FY 2021, as discussed in section VI. of the FY
2021 IRF PPS proposed rule (85 FR 22065, 22085 through 22086).
Amend the IRF coverage requirements to remove the post-
admission physician evaluation requirement as discussed in section VII.
of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22086 through
22087).
Amend the IRF coverage requirements to codify existing
documentation instructions and guidance as discussed in section VIII.
of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22087 through
22088).
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, if permitted
under state law, as discussed in section IX. of the FY 2021 IRF PPS
proposed rule (85 FR 22065, 22088 through 22090).
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 the FY 2021 IRF
PPS proposed rule (85 FR 22065, 22090).

IV. Analysis of and Responses to Public Comments

We received 2,668 timely responses from the public, many of which
contained multiple comments on the FY

[[Page 48428]]

2021 IRF PPS proposed rule (85 FR 22065). We received comments from
various trade associations, inpatient rehabilitation facilities,
individual physicians, therapists, clinicians, health care industry
organizations, health care consulting firms, individual beneficiaries,
and beneficiary groups. The following sections, arranged by subject
area, include a summary of the public comments that we received, and
our responses.

V. 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.
We proposed 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 proposed 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 also proposed that if more recent data become
available after the publication of the proposed rule and before the
publication of the final rule, we would use such data to determine the
FY 2021 CMG relative weights and average length of stay values in the
final rule.
We proposed 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 final rule is as follows:
Step 1. We estimate the effects that comorbidities have on costs.
Step 2. We adjust the cost of each Medicare discharge (case) to
reflect the effects found in 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 proposed 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. We note that,
as we typically do, we updated our data between the FY 2021 IRF PPS
proposed and final rules to ensure that we use the most recent
available data in calculating IRF PPS payments. This updated data
reflects a more complete set of claims for FY 2019 and additional cost
report data for FY 2018. 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 changes to the CMG relative weights (as
discussed in this final rule).
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2 to determine the budget neutrality factor of
0.9970 that would maintain the same total estimated aggregate payments
in FY 2021 with and without the 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 VI.D. of this final rule, we discuss the use of the
existing methodology to calculate the standard payment conversion
factor for FY 2021.
In Table 2, ``Relative Weights and Average Length of Stay Values
for Revised 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.

Table 2--Relative Weights and Average Length of Stay Values for the Revised Case-Mix Groups
--------------------------------------------------------------------------------------------------------------------------------------------------------
Relative weight Average length of stay
-------------------------------------------------------------------------------------------
CMG CMG description (M = motor, A = No No
age) Tier 1 Tier 2 Tier 3 comorbidity Tier 1 Tier 2 Tier 3 comorbidity
tier tier
--------------------------------------------------------------------------------------------------------------------------------------------------------
0101...................... Stroke M >=72.50................ 1.0314 0.8818 0.8182 0.7830 10 10 10 9
0102...................... Stroke M >=63.50 and M <72.50... 1.3174 1.1262 1.0451 1.0001 13 13 12 11
0103...................... Stroke M >=50.50 and M <63.50... 1.6846 1.4401 1.3363 1.2789 15 16 15 14
0104...................... Stroke M >=41.50 and M <50.50... 2.1886 1.8710 1.7361 1.6615 19 19 18 18
0105...................... Stroke M <41.50 and A >=84.50... 2.4829 2.1226 1.9696 1.8850 23 23 21 20
0106...................... Stroke M <41.50 and A <84.50.... 2.8525 2.4385 2.2628 2.1655 26 24 23 23
0201...................... Traumatic brain injury M >=73.50 1.1495 0.9399 0.8443 0.7891 10 11 10 10
0202...................... Traumatic brain injury M >=61.50 1.4440 1.1807 1.0606 0.9913 12 14 12 12
and M <73.50.
0203...................... Traumatic brain injury M >=49.50 1.7411 1.4235 1.2787 1.1952 15 15 14 14
and M <61.50.
0204...................... Traumatic brain injury M >=35.50 2.1669 1.7718 1.5915 1.4876 20 19 17 16
and M <49.50.
0205...................... Traumatic brain injury M <35.50. 2.7369 2.2377 2.0101 1.8788 32 24 21 18
0301...................... Non-traumatic brain injury M 1.2263 0.9941 0.9185 0.8514 11 11 10 10
>=65.50.
0302...................... Non-traumatic brain injury M 1.5711 1.2737 1.1768 1.0908 14 14 13 12
>=52.50 and M <65.50.

[[Page 48429]]

0303...................... Non-traumatic brain injury M 1.8808 1.5247 1.4087 1.3058 16 16 15 14
>=42.50 and M <52.50.
0304...................... Non-traumatic brain injury M 2.1101 1.7105 1.5805 1.4650 19 18 16 16
<42.50 and A >=78.50.
0305...................... Non-traumatic brain injury M 2.3049 1.8685 1.7264 1.6002 21 20 17 17
<42.50 and A <78.50.
0401...................... Traumatic spinal cord injury M 1.3684 1.1612 1.0460 0.9718 12 12 12 11
>=56.50.
0402...................... Traumatic spinal cord injury M 1.7807 1.5110 1.3611 1.2646 16 16 14 15
>=47.50 and M <56.50.
0403...................... Traumatic spinal cord injury M 2.1371 1.8135 1.6336 1.5177 20 20 18 17
>=41.50 and M <47.50.
0404...................... Traumatic spinal cord injury M 3.6185 3.0706 2.7660 2.5698 29 35 32 26
<31.50 and A <61.50.
0405...................... Traumatic spinal cord injury M 2.7444 2.3288 2.0978 1.9490 25 26 22 21
>=31.50 and M <41.50.
0406...................... Traumatic spinal cord injury M 3.5969 3.0522 2.7494 2.5544 34 31 28 28
>=24.50 and M <31.50 and A
>=61.50.
0407...................... Traumatic spinal cord injury M 4.1070 3.4850 3.1394 2.9166 46 36 32 32
<24.50 and A >=61.50.
0501...................... Non-traumatic spinal cord injury 1.3097 1.0178 0.9609 0.8875 13 12 11 10
M >=60.50.
0502...................... Non-traumatic spinal cord injury 1.6273 1.2646 1.1939 1.1028 14 14 13 12
M >=53.50 and M <60.50.
0503...................... Non-traumatic spinal cord injury 1.8899 1.4687 1.3866 1.2807 16 16 15 14
M >=48.50 and M <53.50.
0504...................... Non-traumatic spinal cord injury 2.2506 1.7491 1.6513 1.5252 21 19 18 17
M >=39.50 and M <48.50.
0505...................... Non-traumatic spinal cord injury 2.9362 2.2819 2.1543 1.9899 28 24 22 21
M <39.50.
0601...................... Neurological M >=64.50.......... 1.3673 1.0293 0.9649 0.8770 12 11 10 10
0602...................... Neurological M >=52.50 and M 1.7016 1.2809 1.2008 1.0915 14 13 12 12
<64.50.
0603...................... Neurological M >=43.50 and M 2.0214 1.5216 1.4264 1.2965 16 15 15 14
<52.50.
0604...................... Neurological M <43.50........... 2.3456 1.7657 1.6552 1.5045 20 18 17 16
0701...................... Fracture of lower extremity M 1.2473 1.0115 0.9585 0.8811 11 12 11 10
>=61.50.
0702...................... Fracture of lower extremity M 1.5595 1.2647 1.1985 1.1016 14 14 13 12
>=52.50 and M <61.50.
0703...................... Fracture of lower extremity M 1.8956 1.5373 1.4568 1.3390 17 16 15 15
>=41.50 and M <52.50.
0704...................... Fracture of lower extremity M 2.1660 1.7566 1.6646 1.5300 19 18 17 17
<41.50.
0801...................... Replacement of lower-extremity 1.1268 0.9068 0.8121 0.7564 10 10 9 9
joint M >=63.50.
0802...................... Replacement of lower-extremity 1.3248 1.0661 0.9548 0.8893 12 11 11 10
joint M >=57.50 and M <63.50.
0803...................... Replacement of lower-extremity 1.4799 1.1909 1.0666 0.9934 12 13 12 11
joint M >=51.50 and M <57.50.
0804...................... Replacement of lower-extremity 1.7056 1.3726 1.2293 1.1449 14 15 13 13
joint M >=42.50 and M <51.50.
0805...................... Replacement of lower-extremity 1.9874 1.5994 1.4324 1.3341 17 17 15 14
joint M <42.50.
0901...................... Other orthopedic M >=63.50...... 1.2111 0.9651 0.9133 0.8273 11 11 10 10
0902...................... Other orthopedic M >=51.50 and M 1.5078 1.2015 1.1371 1.0301 13 13 12 12
<63.50.
0903...................... Other orthopedic M >=44.50 and M 1.7744 1.4139 1.3382 1.2122 15 15 14 14
<51.50.
0904...................... Other orthopedic M <44.5........ 2.0373 1.6235 1.5365 1.3918 17 17 16 15
1001...................... Amputation lower extremity M 1.2960 1.0863 0.9748 0.9004 12 13 11 11
>=64.50.
1002...................... Amputation lower extremity M 1.6010 1.3419 1.2042 1.1123 14 15 13 13
>=55.50 and M <64.50.
1003...................... Amputation lower extremity M 1.8708 1.5681 1.4072 1.2997 16 17 15 14
>=47.50 and M <55.50.
1004...................... Amputation lower extremity M 2.2049 1.8481 1.6585 1.5318 18 19 17 16
<47.50.
1101...................... Amputation non-lower extremity M 1.2999 1.1583 1.0117 0.9810 12 11 11 13
>=58.50.
1102...................... Amputation non-lower extremity M 1.7367 1.5476 1.3517 1.3107 14 13 14 14
>=52.50 and M <58.50.
1103...................... Amputation non-lower extremity M 1.9515 1.7390 1.5188 1.4728 17 13 15 14
<52.50.
1201...................... Osteoarthritis M >=61.50........ 1.4251 0.9495 0.9495 0.8718 11 10 10 10
1202...................... Osteoarthritis M >=49.50 and M 1.7907 1.1930 1.1930 1.0954 13 14 13 12
<61.50.
1203...................... Osteoarthritis M <49.50 and A 2.0815 1.3867 1.3867 1.2734 15 14 16 14
>=74.50.
1204...................... Osteoarthritis M <49.50 and A 2.1877 1.4575 1.4575 1.3383 15 15 15 15
<74.50.
1301...................... Rheumatoid other arthritis M 1.1277 0.9311 0.8839 0.7847 9 11 10 9
>=62.50.
1302...................... Rheumatoid other arthritis M 1.5429 1.2740 1.2094 1.0737 12 13 13 12
>=51.50 and M <62.50.
1303...................... Rheumatoid other arthritis M 1.7786 1.4686 1.3941 1.2377 14 15 14 14
>=44.50 and M <51.50 and A
>=64.50.
1304...................... Rheumatoid other arthritis M 2.0617 1.7024 1.6161 1.4347 14 17 16 16
<44.50 and A >=64.50.
1305...................... Rheumatoid other arthritis M 2.0876 1.7237 1.6363 1.4527 15 16 16 16
<51.50 and A <64.50.
1401...................... Cardiac M >=68.50............... 1.1456 0.9392 0.8477 0.7585 10 10 10 9
1402...................... Cardiac M >=55.50 and M <68.50.. 1.4391 1.1799 1.0650 0.9529 13 13 11 11
1403...................... Cardiac M >=45.50 and M <55.50.. 1.7474 1.4326 1.2931 1.1570 15 15 13 13
1404...................... Cardiac M <45.50................ 2.0524 1.6827 1.5188 1.3590 18 17 16 14
1501...................... Pulmonary M >=68.50............. 1.2905 1.0335 0.9655 0.9262 11 11 10 10
1502...................... Pulmonary M >=56.50 and M <68.50 1.5913 1.2744 1.1906 1.1421 13 13 12 12
1503...................... Pulmonary M >=45.50 and M <56.50 1.8476 1.4796 1.3823 1.3261 16 14 13 13
1504...................... Pulmonary M <45.50.............. 2.1421 1.7154 1.6027 1.5375 22 16 15 14

[[Page 48430]]

1601...................... Pain syndrome M >=65.50......... 0.9889 0.9889 0.8919 0.8028 9 10 11 9
1602...................... Pain syndrome M >=58.50 and M 1.1078 1.1078 0.9991 0.8992 10 11 11 11
<65.50.
1603...................... Pain syndrome M >=43.50 and M 1.3538 1.3538 1.2209 1.0989 12 14 13 13
<58.50.
1604...................... Pain syndrome M <43.50.......... 1.7201 1.7201 1.5513 1.3963 13 15 17 15
1701...................... Major multiple trauma without 1.3910 1.0912 0.9919 0.9032 12 13 11 11
brain or spinal cord injury M
>=57.50.
1702...................... Major multiple trauma without 1.6988 1.3328 1.2115 1.1031 15 14 13 13
brain or spinal cord injury M
>=50.50 and M <57.50.
1703...................... Major multiple trauma without 2.0140 1.5799 1.4362 1.3077 18 16 15 15
brain or spinal cord injury M
>=41.50 and M <50.50.
1704...................... Major multiple trauma without 2.2279 1.7478 1.5888 1.4466 17 19 17 16
brain or spinal cord injury M
>=36.50 and M <41.50.
1705...................... Major multiple trauma without 2.4447 1.9179 1.7434 1.5873 23 20 18 17
brain or spinal cord injury M
<36.50.
1801...................... Major multiple trauma with brain 1.2381 0.9821 0.8820 0.8180 14 13 10 10
or spinal cord injury M >=67.50.
1802...................... Major multiple trauma with brain 1.5767 1.2506 1.1232 1.0418 13 15 12 12
or spinal cord injury M >=55.50
and M <67.50.
1803...................... Major multiple trauma with brain 1.9345 1.5344 1.3781 1.2782 17 17 15 14
or spinal cord injury M >=45.50
and M <55.50.
1804...................... Major multiple trauma with brain 2.2183 1.7596 1.5803 1.4657 22 19 17 16
or spinal cord injury M >=40.50
and M <45.50.
1805...................... Major multiple trauma with brain 2.6487 2.1010 1.8869 1.7501 28 23 20 19
or spinal cord injury M >=30.50
and M <40.50.
1806...................... Major multiple trauma with brain 3.4119 2.7063 2.4305 2.2543 37 29 22 25
or spinal cord injury M <30.50.
1901...................... Guillain-Barr[eacute] M >=66.50. 1.2031 0.9356 0.9226 0.8738 14 12 13 10
1902...................... Guillain-Barr[eacute] M >=51.50 1.6292 1.2670 1.2493 1.1832 18 14 14 14
and M <66.50.
1903...................... Guillain-Barr[eacute] M >=38.50 2.5939 2.0172 1.9890 1.8838 25 21 21 21
and M <51.50.
1904...................... Guillain-Barr[eacute] M <38.50.. 3.8189 2.9699 2.9284 2.7735 44 31 29 29
2001...................... Miscellaneous M >=66.50......... 1.2118 0.9833 0.9005 0.8282 11 11 10 9
2002...................... Miscellaneous M >=55.50 and M 1.4899 1.2090 1.1072 1.0182 13 13 12 11
<66.50.
2003...................... Miscellaneous M >=46.50 and M 1.7634 1.4309 1.3105 1.2052 15 15 14 13
<55.50.
2004...................... Miscellaneous M <46.50 and A 1.9847 1.6104 1.4749 1.3564 18 17 15 15
>=77.50.
2005...................... Miscellaneous M <46.50 and A 2.1338 1.7315 1.5858 1.4583 19 18 16 15
<77.50.
2101...................... Burns M >=52.50................. 1.8033 1.3711 1.1272 1.1272 17 13 13 14
2102...................... Burns M <52.50.................. 2.4055 1.8289 1.5036 1.5036 20 21 15 15
5001...................... Short-stay cases, length of stay ......... ......... ......... 0.1643 ......... ......... ......... 2
is 3 days or fewer.
5101...................... Expired, orthopedic, length of ......... ......... ......... 0.7262 ......... ......... ......... 8
stay is 13 days or fewer.
5102...................... Expired, orthopedic, length of ......... ......... ......... 1.8015 ......... ......... ......... 19
stay is 14 days or more.
5103...................... Expired, not orthopedic, length ......... ......... ......... 0.8454 ......... ......... ......... 8
of stay is 15 days or fewer.
5104...................... Expired, not orthopedic, length ......... ......... ......... 2.0896 ......... ......... ......... 20
of stay is 16 days or more.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Generally, updates to the CMG relative weights result in some
increases and some decreases to the CMG relative weight values. Table 3
shows how we estimate that the application of the 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 implement the CMG relative weight revisions in a
budget-neutral manner (as previously described), total estimated
aggregate payments to IRFs for FY 2021 are not affected as a result of
the CMG relative weight revisions. However, the revisions affect the
distribution of payments within CMGs and tiers.

Table 3--Distributional Effects of the Changes to the CMG Relative
Weights
------------------------------------------------------------------------
Number of Percentage
Percentage change in CMG relative weights cases of cases
affected affected
------------------------------------------------------------------------
Increased by 15% or more...................... 64 0.0
Increased by between 5% and 15%............... 1,830 0.4
Changed by less than 5%....................... 404,940 99.3
Decreased by between 5% and 15%............... 1,029 0.3
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 revisions for FY 2021. The

[[Page 48431]]

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.
The comments we received on our proposal to update the CMG relative
weights and average length of stay values for FY 2021 are summarized
below.
Comment: One commenter expressed concern about the decreases in
some of the CMG relative weights and average length of stay values from
the proposed updates, and questioned whether the FY 2019 data used to
update these values for FY 2021 are reliable and valid. This commenter
suggested that CMS freeze the CMG relative weights and average length
of stay values at FY 2020 levels. This commenter also requested that
CMS provide patient level data to allow stakeholders to analyze and
model IRF payments and requested that CMS convene regularly scheduled
TEPs to discuss and review payment model analyses. Additionally, this
commenter also suggested that CMS should modify Table 3 to reflect the
payment impacts of updating the CMG relative weights and requested that
CMS provide actual changes in payment instead of changes in
percentages, as this would provide more transparency related to the
actual changes that IRFs may experience.
Response: The annual updates to the CMG relative weights, which
include both increases and decreases to the CMG relative weights, are
intended to ensure that IRF payments are aligned as closely as possible
with the current costs of care. The relative weights for each of the
CMGs and tiers represent the relative costliness of patients in those
CMGs and tiers compared with patients in other CMGs and tiers.
Additionally, the average length of stay values are only used to
determine which cases qualify for the short-stay transfer policy and
are not used to determine payments for the non-short-stay transfer
cases.
We do not agree that it would be appropriate to freeze the CMG
relative weights and average length of stay values at FY 2020 levels
because this would require us to base them on older data. Updating
these values based on the most recent available data ensures that the
IRF case mix system is as reflective as possible of recent changes in
IRF utilization and case mix, thereby ensuring that IRF payments
appropriately reflect the relative costs of caring for IRF patients.
Freezing these values at FY 2020 levels does not allow us to reflect
any changes in IRF utilization and case mix that might have occurred
over time. As stated in the FY 2021 IRF PPS proposed rule, the FY 2019
data is the most current and complete data available for updating
payments.
We are confident that the data is valid and reliable for use in
setting IRF PPS payment rates. CMS's contractor (Research Triangle
Institute (RTI)) analyzed 2 year's worth of these data (FYs 2017 and
2018) to determine the extent to which the data could predict resource
use in the IRF setting. RTI produced two reports containing their
analyses and findings, ``Analyses to Inform the Potential use of
Standardized Patient Assessment Data Elements in the Inpatient
Rehabilitation Facility Prospective Payment System (PDF)'' (April 2018)
and ``Analyses to Inform the Use of Standardized Patient Assessment
Data Elements in the Inpatient Rehabilitation Facility Prospective
Payment System (PDF)'' (March 2019). These reports are both available
for download from the IRF PPS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.
As most recently discussed in detail in the FY 2020 IRF PPS final
rule (84 FR 39054), we believe that these data accurately reflect the
severity of the IRF patient population and the associated costs of
caring for these patients in the IRF setting. Therefore, we believe it
is appropriate to use the FY 2019 data to update the CMG relative
weights and average length of stay values for FY 2021 to ensure the
case mix system is as reflective as possible of recent changes in IRF
utilization and case mix.
With regard to the request for patient-level data, we are unable to
make patient assessment and claims data publicly available on the CMS
website because these data contain information that can be used to
identify individual Medicare beneficiaries. However, stakeholders may
obtain these data through the standard CMS data acquisition and Data
Use Agreement (DUA) processes. More information on CMS data acquisition
process can be found on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/FilesForOrderGenInfo/index.
In addition, with regard to the request for the regularly scheduled
TEPs to obtain stakeholder input on the routine annual updates to the
CMG relative weights and average length of stay values, we provide the
methodology for these updates in the IRF PPS proposed rules each year
to enable stakeholders to comment on the methodology and provide any
suggestions for updating this methodology. Furthermore, we rarely make
changes to this methodology, so we believe that stakeholders have had
ample opportunity to comment on this methodology over the years, and we
do not believe that there would be added value to convening a TEP to
discuss this well-established methodology.
With regard to the comment regarding Table 3, we do not agree with
the commenter's suggestion that utilizing changes in payment would more
adequately project changes in the CMG relative weight values than
examining changes in the relative weight values themselves. We would
also like to note that the data files published in conjunction with
each proposed and final rule contain estimated facility level payment
impacts for each IRF in our analysis file to support transparency and
assist providers in determining the payment implications of the policy
updates contained in each rule. However, we appreciate the commenter's
suggested revisions to Table 3 and will take this comment under
advisement for future consideration.
After consideration of the comments we received, we are finalizing
our proposal to update the CMG relative weights and average length of
stay values for FY 2021, as shown in Table 2 of this final rule. These
updates are effective for FY 2021, that is, for discharges occurring on
or after October 1, 2020 and on or before September 30, 2021.

VI. 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, in the FY 2021 IRF PPS
proposed rule (85 FR 22073 through 22074), we proposed 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

[[Page 48432]]

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 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. FY 2021 Market Basket Update and Productivity Adjustment

For FY 2021 (that is, beginning October 1, 2020 and ending
September 30, 2021), we proposed to update the IRF PPS payments by a
market basket increase factor as required by section 1886(j)(3)(C) of
the Act, with a productivity adjustment as required by section
1886(j)(3)(C)(ii)(I) of the Act. For FY 2021, we proposed 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 proposed 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 was projected
to be 2.9 percent. Therefore, we proposed that the 2016-based IRF
market basket increase factor for FY 2021 would be 2.9 percent. We
proposed that if more recent data became available after the
publication of the proposed rule and before the publication of this
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 this 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 http://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 10-year moving
average growth of MFP for FY 2021 was projected to be 0.4 percentage
point. Thus, in accordance with section 1886(j)(3)(C) of the Act, we
proposed to base the FY 2021 market basket update, which is used to
determine the applicable percentage increase for the IRF payments, on
IGI's fourth quarter 2019 forecast of the 2016-based IRF market basket.
We proposed to then reduce this percentage increase by the estimated
MFP adjustment for FY 2021 of 0.4 percentage point (the 10-year moving
average growth of MFP for the period ending FY 2021 based on IGI's
fourth quarter 2019 forecast). Therefore, the proposed FY 2021 IRF
update was equal to 2.5 percent (2.9 percent market basket update less
0.4 percentage point MFP adjustment). Furthermore, we proposed that if
more recent data became available after the publication of the proposed
rule and before the publication of this final rule (for example, a more
recent estimate of the market basket and/or MFP), we would use such
data to determine the FY 2021 market basket update and MFP adjustment
in this final rule.
Based on the more recent data available for this FY 2021 IRF final
rule (that is, IGI's second quarter 2020 forecast of the 2016-based IRF
market basket rate-of-increase with historical data through the first
quarter of 2020), we estimate that the FY 2021 market basket update is
2.4 percent. We note that the fourth quarter 2019 forecast was
developed prior to the economic impacts of the Coronavirus disease 2019
(COVID-19) pandemic. This lower update (2.4 percent) for FY 2021
relative to the proposed rule (2.9 percent) is primarily driven by
slower anticipated compensation growth for both health-related and
other occupations as labor markets are expected to be significantly
impacted during the recession that started in February 2020 and
throughout the anticipated recovery.
Based on the more recent data available for this FY 2021 IRF final
rule, the current estimate of the 10-year moving average growth of MFP
for FY 2021 is -0.1 percentage point. This MFP is based on the most
recent macroeconomic outlook from IGI at the time of rulemaking
(released June 2020) in order to reflect more current historical
economic data. IGI produces monthly macroeconomic forecasts, which
include projections of all of the economic series used to derive MFP.
In contrast, IGI only produces forecasts of the more detailed price
proxies used in the 2016-based IRF market basket on a quarterly basis.
Therefore, IGI's second quarter 2020 forecast is the most recent
forecast of the 2016-based IRF market basket update.
We note that it has typically been our practice to base the
projection of the market basket price proxies and MFP in the final rule
on the second quarter IGI forecast. For this FY 2021 IRF PPS final
rule, we are using the IGI June macroeconomic forecast for MFP because
it is a more recent forecast, and it is important to use more recent
data during this period when economic trends, particularly employment
and labor productivity, are notably uncertain because of the COVID-19
pandemic. Historically, the MFP adjustment based on the second quarter
IGI forecast has been very similar to the MFP adjustment derived with
IGI's June macroeconomic forecast. Substantial changes in the
macroeconomic indicators in between monthly forecasts are atypical.
Given the unprecedented economic uncertainty as a result of the
COVID-19 pandemic, the change in the IGI macroeconomic series used to
derive MFP between the IGI second quarter 2020 IGI forecast and the IGI
June 2020 macroeconomic forecast is significant. Therefore, we believe
it is technically appropriate to use IGI's more recent June 2020
macroeconomic forecast to determine the MFP adjustment for the final
rule as it reflects more current historical data. For comparison
purposes, the 10-year moving average growth of MFP for FY 2021 is
projected to be -0.1 percentage point based on IGI's June 2020
macroeconomic forecast compared to a FY 2021 projected 10-year moving
average growth of MFP of 0.7 percentage point based on IGI's second
quarter 2020 forecast. Mechanically subtracting the negative

[[Page 48433]]

10-year moving average growth of MFP from the IRF market basket
increase factor using the data from the IGI June 2020 macroeconomic
forecast would have resulted in a 0.1 percentage point increase in the
FY 2021 IRF increase factor. However, under sections
1886(b)(3)(B)(xi)(II) and 1886(j)(3)(C) of the Act, the Secretary is
required to reduce (not increase) the IRF market basket increase factor
by changes in economy-wide productivity. Accordingly, we will be
applying a 0.0 percentage point MFP adjustment to the IRF market basket
increase factor. Therefore, the current estimate of the FY 2021 IRF
increase factor is equal to 2.4 percent.
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 required to update the IRF
PPS payment rates for FY 2021 by an adjusted market basket increase
factor which, based on the most recently available data, is 2.4
percent. Section 1886(j)(3)(C) of the Act does not provide the
Secretary with the authority to apply a different update factor to IRF
PPS payment rates for FY 2021.
The comments we received on the proposed market basket update and
productivity adjustment are summarized below.
Comment: One commenter (MedPAC) stated that Medicare's current
payment rates for IRFs appear to be more than adequate and therefore
recommended that the Congress reduce the IRF payment rate by 5 percent
for FY 2021. The commenter appreciated that CMS cited MedPAC's
recommendation, even while noting that the Secretary does not have the
authority to deviate from statutorily mandated updates.
Response: We appreciate MedPAC's interest in the IRF increase
factor. However, we are required to update IRF PPS payments by the
market basket update adjusted for productivity, as directed by section
1886(j)(3)(C) of the Act.
Comment: A few commenters supported the proposal to update the
market basket and productivity amounts using the latest available data,
and encouraged CMS to update these factors using the latest available
data as part of the release of the IRF PPS Final Rule. One commenter
stated that they were pleased to see an increase in payments to IRFs
and further increases to rural providers.
Response: We appreciate the commenters' support for the proposed
IRF annual payment update. As noted in the proposed rule, the final
update would be based on a more recent forecast of the market basket
and MFP adjustment if available. Therefore, incorporating an updated
estimate of the market basket update and productivity adjustment in the
final rule is consistent with what we have done historically for the
IRF PPS as well as other Medicare PPSs as it reflects more current
historical data as well as a revised outlook on the forecasted price
pressures faced by providers for FY 2021 and inclusive of economic
assumptions regarding the expected impacts from the COVID-19 pandemic.
Comment: Several commenters expressed concern about the continued
application of the productivity adjustment to IRFs. One commenter
stated that while they understand that CMS is bound by statute to
reduce the market basket update by a productivity adjustment factor in
accordance with the PPACA, they continue to be concerned that IRFs will
not have the ability to generate additional productivity gains at a
pace matching the productivity of the economy at large on an ongoing,
consistent basis as contemplated by the PPACA. In addition, the
commenter stated that the recent developments related to the public
health emergency due to COVID-19 have resulted in further productivity
challenges for IRFs. The commenter respectfully requested that CMS
carefully monitor the impact that these productivity adjustments will
have on the rehabilitation hospital sector, provide feedback to
Congress as appropriate, and reduce the productivity adjustment. A few
commenters recommended that CMS continue to research productivity
factors for health care providers and hospitals, and partner with
Congress to implement a more appropriate, health care specific
productivity adjustment.
Response: We acknowledge the commenters' concerns regarding
productivity growth at the economy-wide level and its application to
IRFs. As the commenter acknowledges, section 1886(j)(3)(C)(ii)(I) of
the Act requires the application of a productivity adjustment to the
IRF PPS market basket increase factor. We will continue to monitor the
impact of the payment updates on IRF Medicare payment adequacy as well
as beneficiary access to care.
As stated in the FY 2020 IRF PPS final rule (84 FR 39087), we would
be very interested in better understanding IRF-specific productivity;
however, the data elements required to estimate IRF specific multi-
factor productivity are not produced at the level of detail that would
allow this analysis. We have estimated hospital-sector multi-factor
productivity and have published the findings on the CMS website at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/ProductivityMemo2016.pdf.
Comment: One commenter stated that while they appreciate this
modest increase to the payment rate, it is insufficient to offset the
impact of cost inflation, sequestration, and the financial impact IRFs
are facing due to COVID-19. The commenter encouraged CMS to consider
these additional impacts in the final rule.
Response: Since the publication of the FY 2021 IRF PPS proposed
rule, we have incorporated more current historical data and revised
forecasts provided by IGI that factor in expected impacts on price and
wage pressures from the COVID-19 pandemic. By incorporating the most
recent estimates available of the market basket update and productivity
adjustment, we believe these data reflect the best available projection
of input price inflation faced by IRFs for FY 2021, adjusted for
economy-wide productivity, which is required by statute.
After consideration of the comments we received, we are finalizing
a FY 2021 IRF update equal to 2.4 percent based on the most recent data
available.

C. 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 proposed to continue to classify a cost category as labor-
related if the costs are labor-intensive and vary with the local labor
market.
Based on our definition of the labor-related share and the cost
categories in the 2016-based IRF market basket, we proposed 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,

[[Page 48434]]

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
was 69.0 percent. We proposed that the portion of Capital-Related costs
that are influenced by the local labor market is 46 percent. Since the
relative importance for Capital-Related costs was 8.5 percent of the
2016-based IRF market basket for FY 2021, we proposed 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 proposed a
total labor-related share for FY 2021 of 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 proposed that
if more recent data became available after publication of the proposed
rule and before the publication of this final rule (for example, a more
recent estimate of the labor-related share), we would use such data to
determine the FY 2021 IRF labor-related share in this final rule.
Based on IGI's second quarter 2020 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
69.1 percent. We proposed that the portion of Capital-Related costs
that are influenced by the local labor market is 46 percent. Since the
relative importance for Capital-Related costs is 8.5 percent of the
2016-based IRF market basket for FY 2021, we 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, the current estimate of the
total labor-related share for FY 2021 is equal to 73.0 percent (the sum
of 69.1 percent for the labor-related share of operating costs and 3.9
percent for the labor-related share of Capital-Related costs). Table 4
shows the current estimate of the FY 2021 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 Labor-Related Share and FY 2020 IRF Labor-Related
Share
------------------------------------------------------------------------
FY 2021 labor- FY 2020 final
related share labor related
\1\ share \2\
------------------------------------------------------------------------
Wages and Salaries...................... 48.6 48.1
Employee Benefits....................... 11.4 11.4
Professional Fees: Labor-Related \3\.... 5.0 5.0
Administrative and Facilities Support 0.7 0.8
Services...............................
Installation, Maintenance, and Repair 1.6 1.6
Services...............................
All Other: Labor-Related Services....... 1.8 1.8
Subtotal................................ 69.1 68.7
Labor-related portion of Capital-Related 3.9 4.0
(46%)..................................
-------------------------------
Total Labor-Related Share........... 73.0 72.7
------------------------------------------------------------------------
\1\ Based on the 2016-based IRF market basket relative importance, IGI
2nd quarter 2020 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.

The comment we received on the proposed labor related share for FY
2021 is summarized below.
Comment: One commenter opposed the proposed increase in the labor
related share because it penalizes any facility that has a wage index
less than 1.0. The commenter stated that across the country, there is a
growing disparity between high-wage and low-wage states and stated that
this proposal will continue to exacerbate that disparity and further
harm hospitals in many rural and underserved communities. Unless there
is sufficient data to support the labor related share increase, the
commenter requested that the percentage from 2020 should carry forward
into 2021.
Response: We appreciate the commenter's concern over the increase
in the labor-related share; however, we believe it is technically
appropriate to use the 2016-based IRF market basket relative importance
to determine the labor-related share for FY 2021 as it is based on more
recent data regarding price pressures and cost structure of IRFs. Our
policy to use the most recent market basket to determine the labor-
related share is a policy we have regularly adopted for the IRF PPS,
(such as for the FY 2020 IRF PPS final rule (84 FR 39089)), as well as
for other PPSs including but not limited to the Inpatient Psychiatric
Facility PPS (84 FR 38446) and the Long-term care hospital PPS (84 FR
42642).
After consideration of the comment we received, we are finalizing
the use of the sum of the FY 2021 relative importance for the labor-
related cost categories based on the most recent forecast (IGI's second
quarter 2020 forecast) of the 2016-based IRF market basket labor-
related share cost weights as proposed.

D. 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

[[Page 48435]]

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 proposed 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 proposed 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 proposed 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.
The comments we received on these proposals are summarized below.
Comment: One commenter recommended that CMS repeal the existing
hospital wage index and recommended a number of changes to existing
wage index policies, but acknowledged that legislative action may be
necessary to accomplish some or all of the recommended changes.
Response: We appreciate the commenter's recommendations on
implementing wage index reform and the recommended modifications to the
IRF PPS wage index polices. We believe that such recommendations should
be part of a broader discussion on wage index reform across Medicare
payment systems. These recommendations will be taken into consideration
while we continue to explore potential wage index alternatives in the
future.
Comment: Some commenters who were supportive of using the
concurrent year's IPPS wage data requested that CMS adopt IPPS wage
index polices under the IRF PPS, including geographic reclassification,
the imposition of a rural floor, and adjustments that address wage
disparities between high and low wage index hospitals. Additionally,
some commenters suggested that discrepancies in wage index policies
between the IRF PPS and IPPS settings may impact access to care and
competition for labor and requested that CMS ensure parity between wage
index policies for all hospitals.
Response: We appreciate the commenters' support for the continued
use of the concurrent year's IPPS wage data. However, we note that the
IRF PPS does not account for geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act, and does not apply the ``rural
floor'' under section 4410 of the Balanced Budget Act of 1997 (BBA)
(Pub. L. 105-33, enacted on August 5, 1997). Furthermore, as we do not
have an IRF-specific wage index, we are unable to determine the degree,
if any, to which a geographic reclassification adjustment or a rural
floor policy under the IRF PPS would be appropriate. The rationale for
our current wage index policies is fully described in the FY 2006 IRF
PPS final rule (70 FR 47880, 47926 through 47928).
With regard to the comments requesting that we adopt similar
adjustments to address wage disparities between high and low wage index
IPPS hospitals under the IRF PPS, we would like to note that the IRF
wage index is derived from IPPS wage data. As such, any effects of this
policy on the wage data of IPPS hospitals will be extended to the IRF
setting, as this data will be used to establish the wage index for IRFs
in the future.
We appreciate the commenters' concerns regarding beneficiary access
to care and competition for labor resulting from different applicable
wage index policies across different settings of care. While CMS and
other stakeholders have explored potential alternatives to the current
wage index system in the past, no consensus has been achieved regarding
how best to implement a replacement system. These concerns will be
taken into consideration while we continue to explore potential wage
index reforms and monitor IRF wage index policies. After consideration
of the comments we received, we are finalizing our proposed policies as
discussed above relating to the 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 updates and revisions to the statistical areas to
reflect the recognition of new areas or the addition of counties to
existing areas. In some instances, these updates merge formerly
separate areas, transfer components of an area from one area to
another, or drop components from an area. On July 15, 2015, OMB issued
OMB Bulletin No. 15-01, which provides minor updates to and supersedes
OMB Bulletin No. 13-01 that was issued on February 28, 2013. The
attachment to OMB Bulletin No. 15-01 provides detailed information on
the update to statistical areas since February 28, 2013. The updates
provided in OMB Bulletin No. 15-01 are based on the application of the
2010 Standards for Delineating Metropolitan and Micropolitan
Statistical Areas to Census Bureau population estimates for July 1,
2012 and July 1, 2013.
In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we
adopted the updates set forth in OMB Bulletin No. 15-01 effective
October 1, 2017, beginning with the FY 2018 IRF wage index. For a
complete discussion of the adoption of the updates set forth in OMB
Bulletin No. 15-01, we refer readers to the FY 2018 IRF PPS final rule.
In the FY 2019 IRF PPS final rule (83 FR 38527), we continued to use
the OMB delineations that were adopted beginning with FY 2016 to
calculate the area wage indexes, with updates set forth in OMB Bulletin
No. 15-01 that we adopted beginning with the FY 2018 wage index.

[[Page 48436]]

On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to statistical areas since
July 15, 2015, and are based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates for July 1, 2014 and July 1, 2015.
In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we
adopted the updates set forth in OMB Bulletin No. 17-01 effective
October 1, 2019, beginning with the FY 2020 IRF wage index.
On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which
superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September
14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded the April
10, 2018 OMB Bulletin No. 18-03. These bulletins established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas. A
copy of this bulletin may be obtained at https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. 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), but
it was not issued in time for development of this 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
VI.D.2.b. of this final rule. We proposed 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, the
March 6, 2020 OMB Bulletin 20-01 was not issued in time for development
of this rule. While we do not believe that the minor updates included
in OMB Bulletin 20-01 will impact the updates to the CBSA-based labor
market area delineations, if appropriate, we will propose any updates
from this bulletin in the FY 2022 IRF PPS proposed rule.
b. 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 possible 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 proposed 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 proposed 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 proposed 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 is discussed in
more detail in section VI.D.3. of this final 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 proposed 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 proposed 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 will be rural with the implementation of the new OMB delineations.

Table 5--Counties That Will Transition From Urban to Rural Status
----------------------------------------------------------------------------------------------------------------
County/county
FIPS county code equivalent State Current 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.
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.

[[Page 48437]]

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 proposed 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 VI.D.3. of this final rule for a discussion of the
wage index transition policy due to these changes.
(3) Rural Counties That Will Become Urban Under the New OMB
Delineations
As previously discussed, we are implementing 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 will now be
considered located in urban areas under the new OMB delineations. Table
6 lists the 47 rural counties that will be urban with the
implementation of the new OMB delineations.

Table 6--Counties That Will Transition From Rural to Urban Status
----------------------------------------------------------------------------------------------------------------
County/county Proposed CBSA
FIPS county code equivalent State 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.
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.

[[Page 48438]]

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 proposed 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 VI.D.3. of this final rule for a discussion of
the wage index transition policy.
(4) Urban Counties That Will Move to a Different Urban CBSA Under the
New OMB Delineations
In certain cases, adopting the new OMB delineations involves 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) will experience both a change to its number and its name,
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three
constituent counties will remain the same. In other cases, only the
name of the CBSA will be modified, and none of the currently assigned
counties will be reassigned to a different urban CBSA. Table 7 shows
the current CBSA code and our proposed CBSA code where we proposed to
change either the name or CBSA number only. We are not discussing
further in this section these changes because they are inconsequential
changes with respect to the IRF PPS wage index.

Table 7--Current CBSAs That Will Change CBSA Code or Title
----------------------------------------------------------------------------------------------------------------
Current CBSA
Proposed CBSA code Proposed CBSA title 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-Roswell,
Alpharetta, GA. GA.
12420......................... Austin-Round Rock-Georgetown, 12420 Austin-Round Rock, TX.
TX.
13460......................... Bend, OR....................... 13460 Bend-Redmond, OR.
13980......................... Blacksburg-Christiansburg, VA.. 13980 Blacksburg-Christiansburg-
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-Bluffton, SC 25940 Hilton Head Island-Bluffton-
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, CA. 36084 Oakland-Hayward-Berkeley, CA.
36500......................... Olympia-Lacey-Tumwater, WA..... 36500 Olympia-Tumwater, WA.
38060......................... Phoenix-Mesa-Chandler, AZ...... 38060 Phoenix-Mesa-Scottsdale, AZ.
39150......................... Prescott Valley-Prescott, AZ... 39140 Prescott, 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.
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.
----------------------------------------------------------------------------------------------------------------

[[Page 48439]]

In some cases, counties will 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 will move from one urban CBSA
to another or to a newly proposed or modified CBSA due to the
implementation of the new OMB delineations.

Table 8--Urban Counties that Will Move to a Newly Proposed or Modified CBSA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CBSA
FIPS county code County name State Current CBSA Current CBSA name code Proposed CBSA name
--------------------------------------------------------------------------------------------------------------------------------------------------------
17031................... Cook................. IL 16974 Chicago-Naperville- 16984 Chicago-Naperville-
Arlington Heights, IL. Evanston, IL.
17043................... Du Page.............. IL 16974 Chicago-Naperville- 16984 Chicago-Naperville-
Arlington Heights, IL. Evanston, IL.
17063................... Grundy............... IL 16974 Chicago-Naperville- 16984 Chicago-Naperville-
Arlington Heights, IL. Evanston, 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, IL. Evanston, IL.
17197................... Will................. IL 16974 Chicago-Naperville- 16984 Chicago-Naperville-
Arlington Heights, IL. Evanston, IL.
34023................... Middlesex............ NJ 35614 New York-Jersey City- 35154 New Brunswick-Lakewood,
White Plains, NY-NJ. NJ.
34025................... Monmouth............. NJ 35614 New York-Jersey City- 35154 New Brunswick-Lakewood,
White Plains, NY-NJ. NJ.
34029................... Ocean................ NJ 35614 New York-Jersey City- 35154 New Brunswick-Lakewood,
White Plains, NY-NJ. NJ.
34035................... Somerset............. NJ 35084 Newark, NJ-PA............ 35154 New Brunswick-Lakewood,
NJ.
36027................... Dutchess............. NY 20524 Dutchess County-Putnam 39100 Poughkeepsie-Newburgh-
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-Putnam 35614 New York-Jersey City-
County, NY. White Plains, NY-NJ.
47057................... Grainger............. TN 28940 Knoxville, TN............ 34100 Morristown, TN.
54043................... Lincoln.............. WV 26580 Huntington-Ashland, WV-KY- 16620 Charleston, WV.
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 VI.D.3. of this final rule for a discussion of the
wage index transition policy due to these changes.
We believe the 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 proposed 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 proposed to adopt these revisions to the CSBA based labor
market area delineations in a budget neutral manner. The methodology
for calculating the budget neutrality factor is discussed in section
VI.D.4. of this final rule.
The comments we received on the proposal to adopt the new OMB
delineations, effective beginning with the FY 2021 IRF PPS wage index
are summarized below.
Comment: Commenters were generally supportive of the adoption of
the new delineations; however, two commenters disagreed with the
creation of the new ``New Brunswick-Lakewood, NJ'' CBSA and requested
that CMS delay implementing these revisions to the CBSAs until after
the 2020 decennial census data is available.
Response: We appreciate the commenters' concerns regarding the
impact of implementing the New Brunswick-Lakewood, NJ CBSA designation
on their specific counties. While we understand the commenters' concern
regarding the potential financial impact, we believe that implementing
the revised OMB delineations will create more accurate representations
of labor market areas and result in IRF wage index values being more
representative of the actual costs of labor in a given area. Moreover,
to the extent that providers exist in a labor market area experiencing
a decline in relation to the revised OMB delineations, this would mean
that these providers were previously being paid in excess of what their
reported wage and labor data would suggest is appropriate. We believe
that the OMB standards for delineating Metropolitan and Micropolitan
Statistical Areas are

[[Page 48440]]

appropriate for determining wage area differences and that the values
computed under the revised delineations will result in more appropriate
payments to providers by more accurately accounting for and reflecting
the differences in area wage levels. Therefore, we believe that it is
appropriate to implement the new OMB delineations without delay.
After consideration of the comments we received, we are finalizing
our proposal to adopt the revised OMB delineations contained in OMB
Bulletin 18-04.
3. 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 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 believe that
using the new OMB delineations would create a more accurate payment
adjustment for differences in area wage levels, we also recognize 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 proposed 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
proposed 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 proposed that this 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 budget neutrality factor is
discussed in section VI.D.4. of this final rule.
The comments we received on our proposed transition methodology to
utilize a 5 percent cap on wage index decreases for FY 2021 are
summarized below.
Comment: Commenters were generally supportive of the proposed 5
percent cap transition policy to mitigate the impact of changes to the
wage index values. A few commenters suggested the limit should apply to
both increases and decreases in the wage index. Commenters also
suggested a cap should be applied every year. One commenter requested
that CMS incorporate a blended wage index into the transition,
consisting of 50 percent of the FY 2020 delineations and 50 percent of
the FY 2021 delineations.
Response: We appreciate the comments supporting this transition
methodology. Further, we appreciate the commenters' suggestion that the
cap on wage index movements of more than 5 percent should also be
applied to increases in the wage index. However, as we discussed in the
proposed rule, the purpose of the proposed transition policy, as well
as those we have implemented in the past, is to help mitigate the
significant negative impacts of certain wage index changes, not to
curtail the positive impacts of such changes, and thus we do not
believe it would be appropriate to apply the 5 percent cap on wage
index increases as well. Additionally, we believe that implementing a
cap on wage index values each year would undermine the goal of the wage
index, which is to improve the accuracy of IRF payments, and would only
serve to further delay improving the accuracy of IRF payments.
Therefore, while we believe that a transition is necessary to help
mitigate some of the negative impact from the revised OMB delineations,
we also believe this mitigation must be balanced against the importance
of ensuring accurate payments.
Additionally, the use of a 50/50 blended wage index transition
would affect all IRF providers. We believe it would be more appropriate
to allow IRFs that would experience an increase in their wage index
value to receive the full benefit of their increased wage index value,
which is intended to reflect accurately the higher labor costs in that
area. The utilization of a cap on negative impacts restricts the
transition to only those with negative impacts and allows providers who
would experience positive impacts to receive the full amount of their
wage index increase. As such, 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.
Comment: One commenter requested that CMS provide the data used to
calculate the new wage indices.
Response: The hospital wage data used to derive the IRF PPS wage
index are available from the CMS IPPS wage index websites for each
respective FY, which can be accessed from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index. After
consideration of the comments we received, we are finalizing the
proposed transition methodology, which applies a 5 percent cap on any
decrease in an IRF's wage index for FY 2021 from the IRF's wage index
in FY 2020. This transitional wage index will not result in any change
in estimated aggregate IRF PPS payments by applying a budget neutrality
factor to the standard payment conversion factor. The methodology for
calculating this budget

[[Page 48441]]

neutrality factor is discussed in section VI.D.4. of this final rule.
4. Wage Adjustment
To calculate the wage-adjusted facility payment for the payment
rates set forth in this final rule, we multiply the unadjusted Federal
payment rate for IRFs by the FY 2021 labor-related share based on the
2016-based IRF market basket relative importance (73.0 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 VI.C. of this final rule. We then multiply the
labor-related portion by the applicable IRF wage index. The wage index
tables are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
Adjustments or updates to the IRF wage index made under section
1886(j)(6) of the Act must be made in a budget-neutral manner. We
proposed 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 proposed to
use the listed steps to ensure that the FY 2021 IRF standard payment
conversion factor reflects the update to the wage indexes (based on the
FY 2017 hospital cost report data and taking into account the revisions
to the OMB delineations and the transition policy) and the update to
the labor-related share, in a budget-neutral manner:
Step 1. Calculate the total amount of estimated IRF PPS payments
using the labor-related share and the wage indexes from FY 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 FY 2021 wage index values (based on updated hospital wage
data and taking into account the changes to geographic labor market
area delineations and the transition policy) and the FY 2021 labor-
related share of 73.0 percent.
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the FY 2021 budget-
neutral wage adjustment factor of 1.0013.
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 FY 2021 standard payment conversion
factor.
We discuss the calculation of the standard payment conversion
factor for FY 2021 in section VI.E. of this final rule.
We did not receive any comments on the proposed budget-neutral wage
adjustment factor for FY 2021. Therefore, we are finalizing a budget-
neutral wage adjustment factor of 1.0013 for FY 2021.

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

To calculate the standard payment conversion factor for FY 2021, as
illustrated in Table 5, we begin by applying the 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 2.4 percent increase factor for FY 2021 to the standard
payment conversion factor for FY 2020 of $16,489 yields a standard
payment amount of $16,885. Then, we apply the budget neutrality factor
for the FY 2021 wage index (taking into account the revisions to the
CBSA delineations and the transition policy), and labor-related share
of 1.0013, which results in a standard payment amount of $16,907. We
next apply the budget neutrality factor for the CMG relative weights of
0.9970, which results in the standard payment conversion factor of
$16,856 for FY 2021.
We did not receive any comments on the proposed calculation of the
standard payment conversion factor for FY 2021. Therefore, we are
finalizing the IRF standard payment conversion factor of $16,856 for FY
2021.

Table 9--Calculations To Determine the FY 2021 Standard Payment
Conversion Factor
------------------------------------------------------------------------
Explanation for adjustment Calculations
------------------------------------------------------------------------
Standard Payment Conversion Factor for FY 2020.......... $16,489
Market Basket Increase Factor for FY 2021 (2.4 percent), x 1.024
reduced by 0.0 percentage point for the productivity
adjustment as required by section 1886(j)(3)(C)(ii)(I)
of the Act.............................................
Budget Neutrality Factor for the Updates to the Wage x 1.0013
Index and Labor-Related Share..........................
Budget Neutrality Factor for the Revisions to the CMG x 0.9970
Relative Weights.......................................
FY 2020 Standard Payment Conversion Factor.............. = 16,856
------------------------------------------------------------------------

After the application of the CMG relative weights described in
section V. of this final rule to the FY 2021 standard payment
conversion factor ($16,856), the resulting unadjusted IRF prospective
payment rates for FY 2021 are shown in Table 10.

Table 10--FY 2021 Payment Rates
----------------------------------------------------------------------------------------------------------------
Payment rate Payment rate Payment rate Payment rate
CMG tier 1 tier 2 tier 3 no comorbidity
----------------------------------------------------------------------------------------------------------------
0101............................................ $ 17,385.28 $ 14,863.62 $ 13,791.58 $ 13,198.25
0102............................................ 22,206.09 18,983.23 17,616.21 16,857.69
0103............................................ 28,395.62 24,274.33 22,524.67 21,557.14
0104............................................ 36,891.04 31,537.58 29,263.70 28,006.24
0105............................................ 41,851.76 35,778.55 33,199.58 31,773.56
0106............................................ 48,081.74 41,103.36 38,141.76 36,501.67
0201............................................ 19,375.97 15,842.95 14,231.52 13,301.07
0202............................................ 24,340.06 19,901.88 17,877.47 16,709.35
0203............................................ 29,347.98 23,994.52 21,553.77 20,146.29
0204............................................ 36,525.27 29,865.46 26,826.32 25,074.99
0205............................................ 46,133.19 37,718.67 33,882.25 31,669.05
0301............................................ 20,670.51 16,756.55 15,482.24 14,351.20

[[Page 48442]]

0302............................................ 26,482.46 21,469.49 19,836.14 18,386.52
0303............................................ 31,702.76 25,700.34 23,745.05 22,010.56
0304............................................ 35,567.85 28,832.19 26,640.91 24,694.04
0305............................................ 38,851.39 31,495.44 29,100.20 26,972.97
0401............................................ 23,065.75 19,573.19 17,631.38 16,380.66
0402............................................ 30,015.48 25,469.42 22,942.70 21,316.10
0403............................................ 36,022.96 30,568.36 27,535.96 25,582.35
0404............................................ 60,993.44 51,758.03 46,623.70 43,316.55
0405............................................ 46,259.61 39,254.25 35,360.52 32,852.34
0406............................................ 60,629.35 51,447.88 46,343.89 43,056.97
0407............................................ 69,227.59 58,743.16 52,917.73 49,162.21
0501............................................ 22,076.30 17,156.04 16,196.93 14,959.70
0502............................................ 27,429.77 21,316.10 20,124.38 18,588.80
0503............................................ 31,856.15 24,756.41 23,372.53 21,587.48
0504............................................ 37,936.11 29,482.83 27,834.31 25,708.77
0505............................................ 49,492.59 38,463.71 36,312.88 33,541.75
0601............................................ 23,047.21 17,349.88 16,264.35 14,782.71
0602............................................ 28,682.17 21,590.85 20,240.68 18,398.32
0603............................................ 34,072.72 25,648.09 24,043.40 21,853.80
0604............................................ 39,537.43 29,762.64 27,900.05 25,359.85
0701............................................ 21,024.49 17,049.84 16,156.48 14,851.82
0702............................................ 26,286.93 21,317.78 20,201.92 18,568.57
0703............................................ 31,952.23 25,912.73 24,555.82 22,570.18
0704............................................ 36,510.10 29,609.25 28,058.50 25,789.68
0801............................................ 18,993.34 15,285.02 13,688.76 12,749.88
0802............................................ 22,330.83 17,970.18 16,094.11 14,990.04
0803............................................ 24,945.19 20,073.81 17,978.61 16,744.75
0804............................................ 28,749.59 23,136.55 20,721.08 19,298.43
0805............................................ 33,499.61 26,959.49 24,144.53 22,487.59
0901............................................ 20,414.30 16,267.73 15,394.58 13,944.97
0902............................................ 25,415.48 20,252.48 19,166.96 17,363.37
0903............................................ 29,909.29 23,832.70 22,556.70 20,432.84
0904............................................ 34,340.73 27,365.72 25,899.24 23,460.18
1001............................................ 21,845.38 18,310.67 16,431.23 15,177.14
1002............................................ 26,986.46 22,619.07 20,298.00 18,748.93
1003............................................ 31,534.20 26,431.89 23,719.76 21,907.74
1004............................................ 37,165.79 31,151.57 27,955.68 25,820.02
1101............................................ 21,911.11 19,524.30 17,053.22 16,535.74
1102............................................ 29,273.82 26,086.35 22,784.26 22,093.16
1103............................................ 32,894.48 29,312.58 25,600.89 24,825.52
1201............................................ 24,021.49 16,004.77 16,004.77 14,695.06
1202............................................ 30,184.04 20,109.21 20,109.21 18,464.06
1203............................................ 35,085.76 23,374.22 23,374.22 21,464.43
1204............................................ 36,875.87 24,567.62 24,567.62 22,558.38
1301............................................ 19,008.51 15,694.62 14,899.02 13,226.90
1302............................................ 26,007.12 21,474.54 20,385.65 18,098.29
1303............................................ 29,980.08 24,754.72 23,498.95 20,862.67
1304............................................ 34,752.02 28,695.65 27,240.98 24,183.30
1305............................................ 35,188.59 29,054.69 27,581.47 24,486.71
1401............................................ 19,310.23 15,831.16 14,288.83 12,785.28
1402............................................ 24,257.47 19,888.39 17,951.64 16,062.08
1403............................................ 29,454.17 24,147.91 21,796.49 19,502.39
1404............................................ 34,595.25 28,363.59 25,600.89 22,907.30
1501............................................ 21,752.67 17,420.68 16,274.47 15,612.03
1502............................................ 26,822.95 21,481.29 20,068.75 19,251.24
1503............................................ 31,143.15 24,940.14 23,300.05 22,352.74
1504............................................ 36,107.24 28,914.78 27,015.11 25,916.10
1601............................................ 16,668.90 16,668.90 15,033.87 13,532.00
1602............................................ 18,673.08 18,673.08 16,840.83 15,156.92
1603............................................ 22,819.65 22,819.65 20,579.49 18,523.06
1604............................................ 28,994.01 28,994.01 26,148.71 23,536.03
1701............................................ 23,446.70 18,393.27 16,719.47 15,224.34
1702............................................ 28,634.97 22,465.68 20,421.04 18,593.85
1703............................................ 33,947.98 26,630.79 24,208.59 22,042.59
1704............................................ 37,553.48 29,460.92 26,780.81 24,383.89
1705............................................ 41,207.86 32,328.12 29,386.75 26,755.53
1801............................................ 20,869.41 16,554.28 14,866.99 13,788.21
1802............................................ 26,576.86 21,080.11 18,932.66 17,560.58
1803............................................ 32,607.93 25,863.85 23,229.25 21,545.34
1804............................................ 37,391.66 29,659.82 26,637.54 24,705.84
1805............................................ 44,646.49 35,414.46 31,805.59 29,499.69

[[Page 48443]]

1806............................................ 57,510.99 45,617.39 40,968.51 37,998.48
1901............................................ 20,279.45 15,770.47 15,551.35 14,728.77
1902............................................ 27,461.80 21,356.55 21,058.20 19,944.02
1903............................................ 43,722.78 34,001.92 33,526.58 31,753.33
1904............................................ 64,371.38 50,060.63 49,361.11 46,750.12
2001............................................ 20,426.10 16,574.50 15,178.83 13,960.14
2002............................................ 25,113.75 20,378.90 18,662.96 17,162.78
2003............................................ 29,723.87 24,119.25 22,089.79 20,314.85
2004............................................ 33,454.10 27,144.90 24,860.91 22,863.48
2005............................................ 35,967.33 29,186.16 26,730.24 24,581.10
2101............................................ 30,396.42 23,111.26 19,000.08 19,000.08
2102............................................ 40,547.11 30,827.94 25,344.68 25,344.68
5001............................................ - - - 2,769.44
5101............................................ - - - 12,240.83
5102............................................ - - - 30,366.08
5103............................................ - - - 14,250.06
5104............................................ - - - 35,222.30
----------------------------------------------------------------------------------------------------------------

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

Table 11 illustrates the methodology for adjusting the prospective
payments (as described in section VI. of this final rule). The
following examples are based on two hypothetical Medicare
beneficiaries, both classified into CMG 0104 (without comorbidities).
The unadjusted prospective payment rate for CMG 0104 (without
comorbidities) appears in Table 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 0.8354, 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 0.8697, and a teaching status adjustment of
0.0784.
To calculate each IRF's labor and non-labor portion of the
prospective payment, we begin by taking the unadjusted prospective
payment rate for CMG 0104 (without comorbidities) from Table 10. Then,
we multiply the labor-related share for FY 2021 (73.0 percent)
described in section VI.C. of this final rule by the unadjusted
prospective payment rate. To determine the non-labor portion of the
prospective payment rate, we subtract the labor portion of the Federal
payment from the unadjusted prospective payment.
To compute the wage-adjusted prospective payment, we multiply the
labor portion of the Federal payment by the appropriate wage index
located in the applicable wage index table. This table is available on
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
The resulting figure is the wage-adjusted labor amount. Next, we
compute the wage-adjusted Federal payment by adding the wage-adjusted
labor amount to the non-labor portion of the Federal payment.
Adjusting the wage-adjusted Federal payment by the facility-level
adjustments involves several steps. First, we take the wage-adjusted
prospective payment and multiply it by the appropriate rural and LIP
adjustments (if applicable). Second, to determine the appropriate
amount of additional payment for the teaching status adjustment (if
applicable), we multiply the teaching status adjustment (0.0784, in
this example) by the wage-adjusted and rural-adjusted amount (if
applicable). Finally, we add the additional teaching status payments
(if applicable) to the wage, rural, and LIP-adjusted prospective
payment rates. Table 11 illustrates the components of the adjusted
payment calculation.

Table 11--Example of Computing the FY 2021 IRF Prospective Payment
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Steps ........................ Rural facility A (Spencer
Co., IN)
Urban facility B (Harrison Co., IN)
----------------------------------------------------------------------------------------------------------------
1............................. Unadjusted Payment...... $28,006.24 $28,006.24
2............................. Labor Share............. x 0.730 x 0.730
3............................. Labor Portion of Payment = $20,444.56 = $20,444.56
4............................. CBSA-Based Wage Index\.. x 0.8354 x 0.8697
5............................. Wage-Adjusted Amount.... = $17,079.38 = $17,780.63
6............................. Non-Labor Amount........ + $7,561.68 + $7,561.68
7............................. Wage-Adjusted Payment... = $24,641.06 = $25,342.31
8............................. Rural Adjustment........ x 1.149 x 1.000
9............................. Wage- and Rural-Adjusted = $28,312.58 = $25,342.31
Payment.
10............................ LIP Adjustment.......... x 1.0156 x 1.0454
11............................ Wage-, Rural- and LIP- = $28,754.25 = $26,492.85
Adjusted Payment.
12............................ Wage- and Rural-Adjusted $28,312.59 $25,342.31
Payment.
13............................ Teaching Status x 0 x 0.0784
Adjustment.
14............................ Teaching Status = $0.00 = $1,986.84
Adjustment Amount.
15............................ Wage-, Rural-, and LIP- + $28,754.25 + $26,492.85
Adjusted Payment.
16............................ Total Adjusted Payment.. = $28,754.25 = $28,479.69
----------------------------------------------------------------------------------------------------------------

[[Page 48444]]

Thus, the adjusted payment for Facility A would be $28,754.25, and
the adjusted payment for Facility B would be $28,479.69.

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

A. 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). 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 FY 2002 IRF PPS final rule, we
analyzed various outlier policies using 3, 4, and 5 percent of the
total estimated payments, and we concluded that an outlier policy set
at 3 percent of total estimated payments would optimize the extent to
which we could reduce the financial risk to IRFs of caring for high-
cost patients, while still providing for adequate payments for all
other (non-high cost outlier) cases.
Subsequently, we updated the IRF outlier threshold amount in the
FYs 2006 through 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 proposed
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 proposed 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 note that, as we typically do, we updated our data between the
FY 2021 IRF PPS proposed and final rules to ensure that we use the most
recent available data in calculating IRF PPS payments. This updated
data includes a more complete set of claims for FY 2019. Based on our
analysis using this updated data, we continue to estimate that IRF
outlier payments as a percentage of total estimated payments are
approximately 2.6 percent in FY 2020. Therefore, we will update the
outlier threshold amount from $9,300 for FY 2020 to $7,906 for FY 2021
to account for the increases in IRF PPS payments and estimated costs
and to maintain estimated outlier payments at approximately 3 percent
of total estimated aggregate IRF payments for FY 2021.
The comments we received on the update to the FY 2021 outlier
threshold amount to maintain estimated outlier payments at
approximately 3 percent of total estimated IRF payments are summarized
below.
Comment: Commenters were generally supportive of the update to the
outlier threshold. One commenter noted support for expanding the
outlier pool from 3 percent to 5 percent of aggregate IRF payments,
while other commenters stated that we should reduce the outlier pool
below 3 percent and still others supported us maintaining the pool at 3
percent.
Response: We thank the commenters for their support of the update
to the outlier threshold. We continue to believe that maintaining the
outlier pool at 3 percent of aggregate IRF payments optimizes the
extent to which we can reduce financial risk to IRFs of caring for
high-cost patients, while still providing for adequate payments for all
other non-high cost outlier cases. We refer readers to the FY 2002 IRF
PPS final rule (66 FR 41316, 41362 through 41363) for more information
regarding the rationale for setting the outlier threshold amount for
the IRF PPS so that estimated outlier payments would equal 3 percent of
total estimated payments.
Comment: Commenters suggested that CMS pay the full 3 percent
outlier pool each year and recommended that CMS include historical
outlier reconciliation dollars in the calculation of the fixed loss
threshold under the IRF PPS. Additionally, a commenter requested that
CMS establish a new outlier threshold baseline to be updated by the
market basket while other commenters suggested that CMS should cap the
overall outlier payments an IRF can receive.
Response: We appreciate the commenters' suggestions regarding
changes to the methodology used to establish an outlier threshold for
IRF PPS payments. However, as we did not propose changes to this
methodology, these comments are outside the scope of this final rule.
We will continue to monitor our IRF outlier policies to ensure that
they continue to compensate IRFs appropriately.
After consideration of the comments received and also taking into
account the most recent available data, we are finalizing the outlier
threshold amount of $7,906 to maintain estimated outlier payments at
approximately 3 percent of total estimated aggregate IRF payments for
FY 2021.

B. 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

[[Page 48445]]

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 propose to apply a ceiling to IRFs' CCRs.
Using the methodology described in that final rule, we proposed to
update the national urban and rural CCRs for IRFs, as well as the
national CCR ceiling for FY 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 proposed 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 proposed 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 final 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 final rule, we estimate
a national average CCR of 0.493 for rural IRFs, and a national average
CCR of 0.398 for urban IRFs.
In accordance with past practice, we proposed to set the national
CCR ceiling at 3 standard deviations above the mean CCR. Using this
method, we proposed a national CCR ceiling of 1.33 for FY 2021. This
means that, if an individual IRF's CCR were to exceed this ceiling of
1.33 for FY 2021, we will 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.
Using the updated FY 2018 cost report data for this final rule, we
estimate a national average CCR ceiling of 1.34, using the same
methodology.
We did not receive any comments on the proposed update to the IRF
CCR ceiling and urban/rural averages for FY 2021. Therefore, we are
finalizing the national average urban CCR at 0.398, the national
average rural CCR at 0.493, and the national average CCR ceiling at
1.34 for FY 2021.

VIII. 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

[[Page 48446]]

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. L. 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. 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 continuing to provide adequate
quality of care for patients.
Therefore, we proposed 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 proposed 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 110.1.2, of the Medicare Benefit Policy Manual.
We note that removal of the post-admission physician evaluation
does not preclude an IRF patient from being evaluated within the first
24 hours of admission if the IRF believes that the patient's condition
warrants such an evaluation. We merely proposed that a post-admission
physician evaluation would no longer be an IRF documentation
requirement for IRF discharges occurring on and after October 1, 2020.
Moreover, removal of the post-admission physician evaluation does not
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 removal of the post-admission physician evaluation does not
attribute to any direct savings for Medicare Part-A or Part-B, we do
believe that removing it will reduce administrative and paperwork
burden for both IRF providers and MACs.
The comments we received 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; our proposed
conforming amendments to Sec. 412.622(a)(3)(iv) to remove the
reference to Sec. 412.622(a)(4)(ii); and on rescinding the above-
mentioned policy described in chapter 1, sections 110.1.2, of the
Medicare Benefit Policy Manual are summarized below.
Comment: The commenters unanimously supported CMS' proposal. Many
commenters agreed that the information contained in the post-admission
physician evaluation is redundant, since the majority of the
information required in the post-admission physician evaluation is
already being captured in the IRF patient's history and physical. Many
commenters stated that not only would the proposal to remove the post-
admission physician evaluation remove redundant documentation
requirements, but it would also remove the added burden of it being a
time sensitive requirement.
Response: We appreciate the commenters' support for the proposal.
We agree that finalizing this proposal will ease administrative and
documentation burden in the IRF setting.
After consideration of the comments we received, we are finalizing
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; our proposed conforming amendments to Sec. 412.622(a)(3)(iv) to
remove the reference to Sec. 412.622(a)(4)(ii); and on rescinding the
above-mentioned policy described in chapter 1, sections 110.1.2, of the
Medicare Benefit Policy Manual.

IX. 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. L. 100-02), as well as the IRF PPS
website (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-

[[Page 48447]]

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. L.
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 proposed 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 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.
The comments we received 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, are summarized below.
Comment: The majority of commenters supported codifying the
existing preadmission screening documentation requirements to the
extent that it makes no substantive policy changes from the
requirements described in the MDPM, chapter 1, section 110.1.1.
Commenters stated that CMS' decision to codify 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 health care
climate, commenters stated that they appreciated CMS' efforts to reduce
tasks that take away from time spend directly with the patient.
Commenters also stated that they agree with CMS that IRF providers and
MACs will benefit from all documentation requirements being located in
the same place in the regulations for ease of reference.
Response: We appreciate the commenters' support for the proposal.
We agree that finalizing this proposal will reduce administrative
burden on both IRF providers and MACs and allow more time to be spent
in direct patient care.
Comment: Some commenters did not support codifying the existing
preadmission screening documentation requirements, stating that the
proposal did not align with CMS' Patients over Paperwork initiative.
These commenters suggested that instead of codifying the existing
requirements, we should allow IRF rehabilitation physicians to rely on
their training and experience to determine which information best
supports the appropriateness of the IRF admission. These commenters
stated that such an approach would reduce documentation burden, and
facilitate timely patient admissions to IRFs.
Response: We appreciate the commenters' concerns. However, we
respectfully disagree that it would be better not to specify basic
elements to include in the pre-admission screening documentation, as we
believe that this would lead to excessive ambiguity in the regulations
and create unnecessary confusion. Codifying the current preadmission
screening requirements into regulation text does not change the amount
of documentation that is required. We did not propose any new required
elements to be completed on the pre-admission screening. Therefore, the
information being collected and the time it takes to collect the
information

[[Page 48448]]

remain the same. Additionally, we agree with the commenters that IRF
rehabilitation physicians should have the freedom to document the
information that best supports their decision to admit the patient in
the preadmission screening documentation. For this reason, we require a
detailed and comprehensive preadmission screening in which we allow
rehabilitation physicians to include any additional information they
deem necessary to the preadmission screening, in addition to the
required elements. However, we believe that it is necessary to specify
the basic minimum elements that we expect to see in a detailed and
comprehensive pre-admission screening to eliminate confusion and
ambiguity in the requirement.
Comment: Several commenters suggested that if CMS finalizes the
proposal to codify the pre-admission screening requirements into
regulation text, CMS should also consider amending the timing of this
requirement (which is currently required to be completed within the 48
hours immediately preceding the IRF admission). Additionally, several
commenters suggested that CMS should allow rehabilitation physicians to
give a verbal approval of the preadmission screening instead of
requiring them to review and concur with the findings and results of
the pre-admission screening prior to admission to the IRF.
Response: We appreciate the commenters' suggestions regarding other
ways to reduce burden associated with the pre-admission screening.
However, since we only solicited comments regarding the elements of the
preadmission screening documentation in the proposed rule (85 FR 22065,
22088), any additional changes to the preadmission screening
requirements are beyond the scope of this final rule. Therefore, we
will take these suggestions into consideration for future rulemaking.
Comment: A few commenters were concerned that codifying the
preadmission screening requirements into regulation text might increase
the amount of technical denials of IRF claims whenever one or more of
the elements is missing from the preadmission screening documentation.
Response: We respectfully disagree with the commenters suggesting
that codifying the requirements into regulation text will increase the
amount of technical denials of IRF claims. We did not propose to add
any new requirements to the pre-admission screening. Therefore, we do
not believe that merely codifying these existing requirements in
regulation will increase technical denials. We expect that IRFs will
continue to complete the preadmission screening documentation as they
always have.
Comment: Some commenters suggested that codifying the required
elements of the pre-admission screening that are duplicative with other
portions of the patient medical record does not alleviate documentation
burden. These commenters suggested that CMS should consider removing
some of the preadmission screening elements that duplicate data already
included in other parts of the patient's IRF medical record (such as
the history and physical and the individualized overall plan of care).
A few commenters suggested that CMS should consider removing the
preadmission screening documentation requirements altogether.
Response: We do not agree with the commenters who suggested that we
remove the pre-admission screening requirement altogether, as we
continue to believe that the pre-admission screening is an integral
part of determining if a patient can tolerate and benefit from IRF
level services. However, we do agree with commenters who suggested that
we should not codify all of the current required elements of the pre-
admission screening, as some of the elements duplicate data that is
already included in other parts of the patients IRF medical record
(such as the history and physical and the individualized overall plan
of care). We are addressing the concerns of the current required
elements of the preadmission screening in section IX. of this final
rule.
Comment: Many commenters stated that removing some of the pre-
admission screening elements that were duplicative of data collected in
various other documents in the patient's IRF medical record (such as
the history and physical and the individualized overall plan of care)
would reduce burden. Several commenters suggested removing the pre-
admission screening elements that require IRF clinicians to predict
what will happen during the IRF stay, as this information frequently
changes during the IRF stay and thereby becomes inaccurate and
unnecessary.
Response: We appreciate the suggestions that commenters submitted
in response to our solicitation of comments regarding what elements of
the pre-admission screening should be removed in order to reduce burden
on rehabilitation physicians. With the assistance of CMS medical
officers, as well as the responses we received from the IRF industry,
we are finalizing removal of the following elements from the pre-
admission screening:

Expected frequency and duration of treatment in the IRF
Any anticipated post-discharge treatments
Other information relevant to the patient's care needs

We believe that the elements noted above are duplicative
requirements that will be captured in other medical documentation, such
as the history and physical or the individualized overall plan of care,
and require the rehabilitation physician to predict what will happen
during and after the IRF admission, which often changes during the IRF
stay. We believe that by removing the above mentioned elements, we are
not only reducing provider burden, but we are continuing to align with
the agency's Patients over Paperwork initiative without diminishing the
quality of care patients receive.
We are, therefore, keeping the following key elements of the pre-
admission screening documentation:

Prior level of function
Expected level of improvement
Expected length of time to achieve that level of improvement
Risk for clinical complications
Conditions that caused the need for rehabilitation
Combinations of treatments needed
Anticipated discharge destination

We believe that the elements above demonstrate not only the
anticipated functional progress of the patient and the therapeutic
disciplines that will be utilized to reach those goals, but also the
need for medical supervision by a physician and supports the need for
an intensive inpatient rehabilitation program instead of a lower level
of care. Since IRF patients are more medically complex than ever
before, often suffering from chronic illnesses or disabilities, and/or
recovering from devastating physical trauma, we believe that these
elements are essential in determining if the patient can tolerate and
benefit from IRF level care. They require a higher level of care and
more intense therapy and physician supervision than patients in other
post-acute care settings. Therefore, properly managing a patient's
medical complexities while developing an informative and, to the extent
possible, an all-inclusive pre-admission screening is of utmost
importance. We continue to believe that having as much pertinent
information about the patient as possible prior to the IRF admission
improves the quality of care the patient receives in the IRF.
Additionally,

[[Page 48449]]

discharge planning in IRFs should begin on the day of admission, so
while it may appear that some pre-admission screening elements are
better discussed after the patient is admitted, we want to continue to
encourage IRFs to begin planning for the patient's discharge upon
admission. Discharge coordination often involves not only the patient,
but family members, caregivers, etc. and it can sometimes take weeks
for all of the discharge details to be sorted out. We want to ensure
that upon discharge, patients are set up for continued success in their
recovery.
Comment: One commenter suggested that we should specify the
requirements for a ``detailed and comprehensive review'' of the
patient's condition and medical history in the pre-admission screening.
Response: As noted above, we believe that it is appropriate for the
rehabilitation physician to use his or her training and experience when
determining what information best supports his or her decision to admit
the patient to the IRF to include in the pre-admission screening. For
this reason, we require a detailed and comprehensive pre-admission
screening in which we allow rehabilitation physicians to include any
additional information, outside of the required elements, they deem
necessary to the pre-admission screening.
After consideration of the comments we received, we are finalizing
our proposal to amend Sec. 412.622(a)(4)(i)(B) and (D) to codify
certain elements of our longstanding documentation instructions and
guidance of the preadmission screening in regulation text.
Specifically, we are finalizing the following elements of the pre-
admission screening requirements prior to codifying the pre-admission
screening elements at Sec. 412.622(a)(4)(i):

These changes will become effective for all IRF discharges on or
after Oct. 1, 2020. We are not finalizing the following elements of the
pre-admission screening documentation:

Expected frequency and duration of treatment in the IRF
Any anticipated post-discharge treatments
Other information relevant to the patient's care needs

These elements will be removed from chapter 1, section 110.1.1 of
the Medicare Benefit Policy Manual.

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. L. 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 proposed 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 proposed 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 also proposed 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''.
The comments we received on our proposals to Sec. Sec. 412.622(c)
and 412.622(a)(3)(ii) are summarized below.
Comment: The majority of commenters support CMS' proposal to
clarify the definition of ``Week.'' Commenters stated that CMS' efforts
to clarify this period of time and utilize consistent language
throughout the regulatory text will improve clarity and reduce
administrative burden on both IRF providers and MACs.
Response: We appreciate the commenters' support for the proposal.
We agree that finalizing this proposal will reduce administrative
burden on both IRF providers and MACs.
Comment: One commenter expressed concern that codifying the
definition of a ``Week'' would cause greater provider burden, as IRF
providers would need to independently track each patient's admission
date to ensure that other requirements were being met timely.
Response: We appreciate the commenter's concern, but the proposed
definition was always the definition that we used for the IRF
requirements in Sec. 412.622. We simply proposed to add the word
``calendar'' to help clarify the definition and eliminate any possible
confusion.
Comment: One commenter suggested that CMS should instead define a
``week'' as a 7 consecutive calendar day period starting on the day
after admission rather than on the day of admission. The commenter
suggested that because some IRF patients are admitted late in the day,
IRF therapists are unable to provide therapy services on the day of
admission. Therefore, according to this commenter, therapists often
only have 6 days to meet the minimum of 15 hours of intensive therapy
requirement during the patient's first week of admission.
Response: We respectfully disagree with the commenter's suggested
modification to the definition of ``week.'' We believe that an IRF
patient's stay should be tracked beginning with the day of admission as
it always has. We believe that the suggested modification would create
unnecessary confusion as to what the actual day of admission is for
other documentation purposes in the IRF medical record. Additionally,
IRFs have shown that they are able to meet the minimum of 15 hours of
intensive therapy requirement, even if the patient is admitted late in
the day.
After consideration of the comments we received, we are finalizing
our proposal to amend Sec. 412.622(c) to clarify the definition of a
``Week'' as a ``7 consecutive calendar days beginning with the date of
admission to the IRF.'' We are also finalizing our proposal 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''.

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

As noted in section VIII. of this final 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

[[Page 48450]]

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
solicited feedback from stakeholders in the proposed rule about
potentially removing some of the preadmission screening documentation
requirements. Specifically, we requested 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?
We appreciate the commenters' responses to this solicitation. We
have summarized and responded to those comments in section IX.A. of
this final rule.

X. Amendment To Allow Non-physician Practitioners To Perform Some of
the Weekly Visits That Are Currently Required To Be Performed by a
Rehabilitation Physician

In October 2019, Executive Order 13890, entitled ``Protecting and
Improving Medicare for Our Nation's Seniors,'' available at https://www.whitehouse.gov/presidential-actions/executive-order-protecting-improving-medicare-nations-seniors/, was issued by the President of the
United States instructing the Secretary to, among other things, propose
a regulation under the Medicare program that would eliminate regulatory
billing and other such requirements that are more stringent than
applicable Federal or State laws and that limit professionals from
practicing within their full scope of practice.
In responding to this Executive Order, CMS has begun to review any
IRF coverage requirements at Sec. 412.622(a) where we explicitly state
the requirement must be completed by a rehabilitation physician to see
if, when appropriate, some of these requirements could be fulfilled by
non-physician practitioners (physician assistants, nurse practitioners,
and licensed practical nurses).
Several of the IRF coverage requirements at Sec. 412.622(a)(3),
(4), and (5) explicitly 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. L. 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.
L. 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 IRF PPS 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?
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

[[Page 48451]]

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, we proposed 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). In the FY 2021 IRF PPS proposed rule, we stated that we agreed
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 stated that we
believed 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 agreed 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 stated that we believed 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 proposed 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 proposed 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 noted 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.
Our proposal did not preclude IRFs from making decisions regarding
the role of rehabilitation physicians or non-physician practitioners.
We merely proposed 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 invited public comment on this proposal. In particular, we
invited commenters to provide feedback on whether they believed 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 on the quality of care
for IRF patients. We also requested information from IRFs regarding
whether or not their 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). We
stated that this information would assist us in refining our estimates
of the changes in Medicare payment that may result from the proposal.
The comments we received on our proposal 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, are
summarized below.
Comment: Some commenters expressed support for the proposal to
allow non-physician practitioners to perform the IRF coverage
requirements. Some commenters stated that non-physician practitioners
are qualified, prepared, and experienced at performing and documenting
mandatory assessments such as those of IRF patients, as well as
providing the high quality of care these patients require.
Additionally, the commenters suggested that authorizing non-physician
practitioners, who have a long history of providing safe, high quality
care to their patients, to treat patients would improve the care for
IRF patients by reducing the burdens of the patient's clinical care
team, thus enabling facilities to utilize their staff in the most
efficient way possible. One of the commenters suggested that non-
physician practitioners were an important part of the IRF team already
assisting with many consults, admissions, and daily patient visits.
Therefore, extending their ability to perform the proposed duties and
sign documentation under the supervision and guidance of a board
certified rehabilitation physician would provide additional assistance
to IRF treatment teams. A few commenters that supported CMS' proposal
stated that given ongoing staffing challenges that many providers face,
including physician burnout, particularly in certain geographic areas,
allowing non-physician practitioners to practice to the top of their
license and use their full skill set would help lower health care costs
and increase access to care. Lastly, a few commenters stated that it
would be helpful if CMS would clearly define the role of non-physician
practitioners in IRFs as there are clinical differences

[[Page 48452]]

between nurse practitioners and physician assistants, and state scope
of practice laws differ.
Response: We appreciate the commenters' support for the proposal 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 continue to believe that non-physician
practitioners have an important role in treating IRF patients. We agree
with commenters that non-physician practitioners have training and
experience in caring for complex patient populations, and that they can
provide much-needed help to rehabilitation physicians. However, given
the overall nature of the comments that we received in response to this
proposal, we believe it is prudent at this time to take a more measured
approach to expanding the role of non-physician practitioners in the
IRF setting to ensure that the vulnerable IRF populations will continue
to receive the highest quality of care for their post-acute
rehabilitation needs. Therefore, we are finalizing a portion of the
proposed policy by amending Sec. 412.622(a)(3)(iv) to allow non-
physician practitioners to conduct one of the three required
rehabilitation physician visits in every week of the IRF stay, with the
exception of the first week, if permitted under state law. In the first
week of the IRF stay, we continue to require the rehabilitation
physician to visit patients a minimum of three times to ensure that the
patient's plan of care is fully established and optimized to the
patient's care needs in the IRF.
Comment: The majority of commenters urged CMS not to finalize this
proposal, expressing concerns that the change would have negative
impacts on the health, quality of care, and recovery success rate of
IRF patients. These commenters stated that the role and judgment of
rehabilitation physicians in IRFs is central to the successful outcomes
of complex IRF patients, and a key element in what separates IRFs from
other lesser intensive post-acute care settings. The commenters stated
that rehabilitation physicians are specifically trained to handle the
distinctive needs of highly complex medical rehabilitation patients
such as spinal cord injury patients, brain injury patients, and complex
wound issues seen in mobility-impaired patients. Additionally,
commenters suggested that rehabilitation physicians are better trained
to manage the comorbidities and medication needs of IRF patients and
evaluate and order durable medical equipment for patients with new
onset of disabilities. Commenters suggested that substituting non-
physician practitioners for rehabilitation physicians in the IRF is
likely to result in worse clinical outcomes for patients and an
increase in medical complications, readmission, acute transfers, and
emergency room utilization. Commenters noted that the costs of these
outcomes--both to the Medicare program and to individual patients--
would more than offset any projected savings tied to the substitution
of non-physician practitioners. Lastly, commenters stated that allowing
non-physician practitioners to perform specific clinical and patient
care functions that currently can only be satisfied by rehabilitation
physicians is inconsistent with Medicare's benefit structure for
rehabilitation hospitals and post-acute care benefits. These commenters
indicated that the IRF benefit structure explicitly requires that each
patient requires physician supervision by a rehabilitation physician,
as specified at Sec. 412.622(a)(3)(iv).
Response: We appreciate the commenters' feedback regarding the
proposal 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. Given the strong concerns that
many commenters noted over this proposed policy, we believe that the
prudent approach at this time is to finalize only a portion of the
proposed policy. Thus, we are finalizing a portion of the proposed
policy by amending Sec. 412.622(a)(3)(iv) to allow non-physician
practitioners to conduct one of the three required rehabilitation
physician visits in every week of the IRF stay, with the exception of
the first week, if permitted under state law. We believe that this
approach mitigates many of the concerns expressed by commenters,
because it preserves the existing benefit structure of the IRF setting,
ensures the quality of care for IRF patients by continuing the
rehabilitation physician's close involvement in the establishment of
the patient's plan of care and the initial implementation of the plan
of care, and allows non-physician practitioners to assist in
implementing the plan of care once it has been fully established. We
believe that this balanced approach maintains the central role and
judgment of the rehabilitation physician in the patient's plan of care,
while also allowing for the expanded role of non-physician
practitioners. We believe this approach takes full advantage of the
extensive training and knowledge that rehabilitation physicians bring
to the care of IRF patients, but also allows patients to benefit from
the training that non-physician practitioners have in caring for
complex patients. We believe that this measured approach may result in
improved outcomes for patients, as it takes full advantage of the
skills of both non-physician practitioners and rehabilitation
physicians. We do not estimate the savings from this expansion of the
role of non-physician practitioners in IRFs to be significant, but we
also do not anticipate that this measured approach will increase costs
to the Medicare program, as suggested by commenters, because
rehabilitation physicians will still be directly involved in
establishing and implementing the patient's IRF plan of care. Non-
physician practitioners can add significant expertise to the patient
care team, including recognizing emergent issues that, if left
unaddressed, could lead to unplanned readmissions to the acute care
hospitals.
Comment: The majority of commenters suggested that non-physician
practitioners do not have the adequate training and experience to
fulfill the preadmission screening, individualized overall plan of
care, 3 weekly face-to-face visits, and interdisciplinary team meeting
requirements. Many of the commenters stated that physicians, by nature
of their medical training and education, are the only types of health
care providers that should make decisions tied to a patient's
admission. Therefore, the majority of commenters stated that they did
not believe that non-physician practitioners should be conducting the
pre-admission screening, as it is the initial evaluation and review of
the patient's condition and need for rehabilitation therapy and medical
treatment. Commenters also stated that having a rehabilitation
physician make the admission decisions would significantly reduce
erroneous claim reviews and denials.
Many commenters suggested that, while non-physician practitioners
can play a vital role in supporting the rehabilitation physician in
coordinating the patient's medical needs with his or her functional
rehabilitation needs, they do not have the adequate training and
experience to play a direct role in the execution of the individualized
overall plan of care for IRF patients.

[[Page 48453]]

Commenters noted that the complexity of patients in IRFs has been
increasing, and it would be illogical, and particularly ill-timed in
light of the COVID-19 public health emergency, to allow a non-physician
practitioner to synthesize and approve all of the elements of the
individualized overall plan of care for IRF patients.
Many commenters stated that CMS' proposal to allow non-physician
practitioners to administer the three weekly face-to-face visits was
particularly concerning because the physician visits with patients
significantly inform the course of patients' treatment and overall
plans of care. In these visits, physicians modify patients' course of
treatment as needed, so that the patient's capacity to benefit is
maximized. Commenters also suggested that a patient's ability to
benefit from the IRF care is diminished if lesser trained clinicians
are tasked with treating the patients. Additionally, commenters
suggested that some states would not permit (under their current laws)
non-physician practitioners to engage in these visits because such
services are only intended to be performed by a licensed physician with
the skillset that allows them to assess the patient or make
modifications to treatment plans, both medically and functionally.
Lastly, commenters stated that all recommendations made by the
interdisciplinary team are directly related to the prognosis and
oversight of the patient's care and should be authorized only by a
rehabilitation physician, as the complex nature of the patient in IRFs,
combined with the delivery of an intensive course of therapy, requires
skills and expertise that far exceed those held by a non-physician
practitioner.
Response: We appreciate the commenters' feedback. While we continue
to believe that non-physician practitioners are well-trained to care
for complex patient populations, the concerns that commenters brought
to our attention on this proposal have led us to believe that we need
to take a more measured approach to expanding the role of non-physician
practitioners in the IRF setting without diminishing the quality of
care. We understand that IRF beneficiaries are a vulnerable population
that require the highest quality of care and we want to ensure that the
policies we finalize provide just that. Thus, we are finalizing a
portion of the proposed policy by amending Sec. 412.622(a)(3)(iv) to
allow non-physician practitioners to conduct one of the three required
rehabilitation physician visits in every week of the IRF stay, with the
exception of the first week, if permitted under state law. We believe
that this measured approach responds to the concerns expressed by
commenters by preserving the rehabilitation physician's training and
judgment at the center of the patient's care plan in the IRF, while
also allowing non-physician practitioners to take an expanded role in
the care of patients. We believe that this approach will allow non-
physician practitioners to play a vital role in supporting the
rehabilitation physician by coordinating the patient's medical needs
with his or her functional rehabilitation needs once the rehabilitation
physician has fully established the patient's plan of care in the first
week. This approach also maintains the rehabilitation physician's
direct involvement in other aspects of the patient's care.
After consideration of the comments we received, we are finalizing
a portion of our proposed policy changes by amending Sec.
412.622(a)(3)(iv) to allow, beginning with the second week of admission
to the IRF, a non-physician practitioner who is determined by the IRF
to have specialized training and experience in inpatient rehabilitation
to conduct 1 of the 3 required face-to-face visits with the patient per
week, provided that such duties are within the non-physician
practitioner's scope of practice under applicable state law. To be
clear, in the first week of the IRF stay, we continue to require the
rehabilitation physician to visit patients a minimum of three times to
ensure that the patient's plan of care is fully established and
optimized to the patient's care needs in the IRF. In the second, third,
fourth weeks of the stay, and beyond, we will continue to require
Medicare fee-for-services beneficiaries in IRFs to receive a minimum of
three rehabilitation physicians visits per week, but will amend Sec.
412.622(a)(3)(iv) to allow non-physician practitioners to independently
conduct one of these three minimum required visits per week. We believe
that this measured approach to expanding the role of non-physician
practitioners in IRFs balances the commenters' concerns about
maintaining the rehabilitation physician at the core of the patient's
plan of care in the IRF with the benefits of expanding the role of non-
physician practitioners, who play an important role in the
interdisciplinary team and the care of complex patients. We are also
making conforming changes to Sec. 412.29(e) to allow, beginning with
the second week of admission to the IRF, a non-physician practitioner
who is determined by the IRF to have specialized training and
experience in inpatient rehabilitation to conduct 1 of the 3 required
face-to-face visits with the patient per week, provided that such
duties are within the non-physician practitioner's scope of practice
under applicable state law.

XI. 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 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

[[Page 48454]]

Market Basket Increase Factor for FY 2021 (2.4 x 1.004
percent), reduced by 0.0 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 1.0013
Index and Labor-Related Share......................
Budget Neutrality Factor for the Revisions to the x 0.9970
CMG Relative Weights...............................
Adjusted FY 2021 Standard Payment Conversion Factor. = $ 16,527
------------------------------------------------------------------------

XII. Miscellaneous Comments

Comment: Several commenters recommended that CMS evaluate how the
public health emergency will impact future reimbursement under current
practices and encouraged CMS to work with stakeholders to make
adjustments to the case-mix system in the future.
Response: We recognize the impact that the public health emergency
is having on all providers and we intend to examine the effects of this
emergency in available Medicare data. We will propose any modifications
to the existing methodologies used to update reimbursements in future
rulemaking if and when appropriate. We value transparency in our
processes and will continue to engage stakeholders in future
development of payment policies.
Comment: We received several comments on the IRF QRP. Several
commenters noted that the status of IRF-PAI 4.0 is unknown along with
the adoption of additional standardized patient assessment data element
items that are being added to IRF-PAI 4.0. Several commenters thanked
CMS for efforts taken to reduce data reporting burden, such as delaying
the release of IRF-PAI 4.0, and granting an exception to the IRF QRP
reporting requirements for Quarter 1 and Quarter 2 of 2020. One
commenter requested that the exemption be extended for all affected
quarters. One commenter requested that measure reliability analyses be
performed and shared to ensure the accuracy of measure calculations in
light of truncated, incomplete, or COVID-19 affected data.
Several commenters also provided recommendations for additions and
modifications of IRF QRP measures. One commenter suggested CMS collect
and stratify patient and caregiver data based on key variables of
inequities in patient care within population segments and other
communities of belonging, such as race and ethnicity, for all types of
measures.
One commenter recommended that CMS exercise flexibility regarding
the non-compliance payment penalty. Another commenter requested that
CMS lower the IRF QRP APU minimum submission threshold from 95 percent
to 80 percent, for consistency with the SNF QRP and LTCH QRP.
Response: We consider these comments to be outside the scope of the
current rulemaking. We refer providers to the interim final rule with
comment entitled, ``Additional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency and Delay of Certain
Reporting Requirements for the Skilled Nursing Facility Quality
Reporting Program'' (85 FR 27595 through 27596) regarding the delay in
the compliance date for the Transfer of Health Information quality
measures and certain standardized patient assessment data elements
(SPADEs). We also refer providers to our June 23, 2020 announcement at
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/Spotlights-Announcements that,
effective July 1, 2020, IRFs must resume reporting their quality data.
We received several additional comments that were outside the scope
of the FY 2021 IRF PPS proposed rule. Specifically, we received
comments regarding the facility-level adjustment factors, cognitive
function and resource use in IRFs, the motor score, the reliability and
validity of IRF data collection, modifications to the 60 percent rule,
IRF regulatory burden reduction, the use of recreational therapy,
IMPACT Act data availability, COVID-19 health pandemic, post-acute care
payment reform, and the PAC PPS prototype among other topics. We thank
the commenters for bringing these issues to our attention, and will
take these comments into consideration for potential policy
refinements.

XIII. Waiver of the 60-Day Delayed Effective Date for the Final Rule

We ordinarily provide a 60-day delay in the effective date of final
rules after the date they are issued in accord with the Congressional
Review Act (CRA) (5 U.S.C. 801(a)(3)). However, section 808(2) of the
CRA provides that, if an agency finds good cause that notice and public
procedure are impracticable, unnecessary, or contrary to the public
interest, the rule shall take effect at such time as the agency
determines. The United States is responding to an outbreak of
respiratory disease caused by a novel (new) coronavirus that has now
been detected in more than 190 locations internationally, including in
all 50 States and the District of Columbia. The virus has been named
``SARS-CoV-2'' and the disease it causes has been named ``coronavirus
disease 2019'' (abbreviated ``COVID-19'').
On January 30, 2020, the International Health Regulations Emergency
Committee of the World Health Organization (WHO) declared the outbreak
a ``Public Health Emergency of international concern.'' On January 31,
2020, Health and Human Services Secretary, Alex M. Azar II, declared a
public health emergency (PHE) for the United States to aid the nation's
healthcare community in responding to COVID-19. On March 11, 2020, the
WHO publicly characterized COVID-19 as a pandemic. On March 13, 2020,
the President of the United States declared the COVID-19 outbreak a
national emergency.
Due to CMS prioritizing efforts in support of containing and
combatting the COVID-19 PHE, and devoting significant resources to that
end, it was impracticable for CMS to complete the work needed on the
IRF PPS final rule in accordance with our usual schedule for this
rulemaking, which aims for a publication date providing for at least 60
days of public notice before the start of the fiscal year to which it
applies. The IRF PPS final rule is necessary to annually review and
update the payment system, and it is critical to ensure that the
payment policies for this payment system are effective on the first day
of the fiscal year to which they are intended to apply. Therefore, in
light of the COVID-19 PHE and the resulting strain on CMS's resources,
it was impracticable for CMS to publish the IRF PPS final rule 60 days
before the effective date, and we are hereby waiving the 60-day
requirement and determining that the IRF PPS final rule

[[Page 48455]]

will take effect 55 days after issuance; it would be contrary to the
public interest for CMS to do otherwise.

XIV. Provisions of the Final Regulations

In this final rule, we are adopting the provisions set forth in the
FY 2021 IRF PPS proposed rule (85 FR 22065), specifically:
We will update the CMG relative weights and average length
of stay values for FY 2021, in a budget neutral manner, as discussed in
section V. of this final rule.
We will update the IRF PPS payment rates for FY 2021 by
the market basket increase factor, based upon the most current data
available, with a productivity adjustment required by section
1886(j)(3)(C)(ii)(I) of the Act, as described in section VI. of this
final rule.
We will adopt the revised OMB delineations, the IRF wage
index transition, and the update to the labor-related share for FY 2021
in a budget-neutral manner, as described in section VI. of this final
rule.
We will calculate the final IRF standard payment
conversion factor for FY 2021, as discussed in section VI. of this
final rule.
We will update the outlier threshold amount for FY 2021,
as discussed in section VII. of this final rule.
We will update the CCR ceiling and urban/rural average
CCRs for FY 2021, as discussed in section VII. of this final rule.
We will amend the IRF coverage requirements to remove the
post-admission physician evaluation requirement as discussed in section
VIII. of this final rule.
We will amend the IRF coverage requirements to codify
existing documentation instructions and guidance as discussed in
section IX. of this final rule.
We will amend the IRF coverage requirements to allow non-
physician practitioners to conduct one of the three minimum required
rehabilitation physician visits every week of the IRF stay, except for
the first week, if permitted under state law, as discussed in section
X. of this final rule.
We will apply the reduction to the FY 2021 IRF increase
factor for IRFs that fail to meet the quality reporting requirements as
discussed in section XI. of this final rule.

XV. Collection of Information Requirements

As discussed in section IX. of this final rule, we are 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. 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 final rule, we are removing
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
amending Sec. 412.622(a)(3)(iv) to remove the reference to Sec.
412.622(a)(4)(ii). We discuss any potential cost savings from this
revision in the Overall Impact section of this final rule.

XVI. Regulatory Impact Analysis

A. Statement of Need

This final rule updates 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 final rule also implements 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 final rule adopts policy changes under the
statutory discretion afforded to the Secretary under section 1886(j) of
the Act. We are finalizing our proposal to adopt more 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 finalizing our proposal to amend the IRF coverage requirements to
remove the post-admission physician evaluation requirement and codify
existing documentation instructions and guidance.

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.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate the total impact of the policy updates described in
this final rule by comparing the estimated payments in FY 2021 with
those in FY 2020. This analysis results in an estimated $260 million
increase for FY 2021 IRF PPS payments. We estimate that this

[[Page 48456]]

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 final rule on all IRFs is to increase estimated
payments by approximately 2.8 percent. However, we find that certain
categories of IRF providers will be expected to experience revenue
impacts in the 3 to 5 percent range. We estimate a 3.0 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 3.4 percent overall impact for teaching IRFs
with resident to average daily census ratio of 10 to 19 percent, and a
3.1 percent overall impact for teaching IRFs with a resident to average
daily census ratio greater than 19 percent. Also, we estimate a 3.2
percent overall impact for IRFs with a DSH patient percentage of 0
percent and a 3.1 percent overall impact for IRFs with a DSH patient
percentage greater than 20 percent. As a result, we anticipate this
final rule will 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 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area and has fewer
than 100 beds. As shown in Table 13, we estimate that the net revenue
impact of this final rule on rural IRFs is to increase estimated
payments by approximately 3.0 percent based on the data of the 132
rural units and 11 rural hospitals in our database of 1,118 IRFs for
which data were available. We estimate an overall impact for rural IRFs
in all areas except Rural South Atlantic and Rural East South Central
of between 3.0 percent and 5.0 percent. As a result, we anticipate this
final 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 on 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 final rule does not mandate any
requirements for State, local, or tribal governments, or for the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has federalism
implications. As stated, this final rule will not have a substantial
effect on state and local governments, preempt state law, or otherwise
have a federalism implication.
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.'' It has been
determined that this final rule is a transfer rule that does not impose
more than de minimis costs and thus is not a regulatory action for the
purposes of Executive Order 13771.
2. Detailed Economic Analysis
This final rule will update the IRF PPS rates contained in the FY
2020 IRF PPS final rule (84 FR 39054). Specifically, this final rule
will update the CMG relative weights and average length of stay values,
the wage index, and the outlier threshold for high-cost cases. This
final rule will 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 adopts more recent OMB statistical area
delineations and applies a transition wage index under the IRF PPS. We
are also amending the IRF coverage requirements to remove the post-
admission physician evaluation requirement and codify existing
documentation instructions and guidance.
We estimate that the impact of the changes and updates described in
this final rule will be a net estimated increase of $260 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 XI. of this
final rule). The impact analysis in Table 13 of this final 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

[[Page 48457]]

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 implementing standard
annual revisions described in this final 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 $260 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 $220 million.
Furthermore, there is an additional estimated $40 million increase in
aggregate payments to IRFs due to the update to the outlier threshold
amount. Therefore, summed together, we estimate that these updates will
result in a net increase in estimated payments of $260 million from FY
2020 to FY 2021.
The effects of the updates that impact IRF PPS payment rates are
shown in Table 13. The following updates that affect the IRF PPS
payment rates are discussed separately below:
The effects of the update to the outlier threshold amount,
from approximately 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 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 budget-neutral labor-related
share and wage index adjustment, as required under section 1886(j)(6)
of the Act.
The effects of the budget neutral changes to the wage
index due to the OMB delineation revisions and the transition wage
index policy.
The effects of the 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 1,118 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 975 IRFs located in
urban areas included in our analysis. Among these, there are 684 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 114 government-owned IRFs. Among these, there are 93
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 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 adjustment to
the outlier threshold amount.
Column (5) shows the estimated effect of the update to the
IRF labor-related share and wage index, in a budget-neutral manner.
Column (6) shows the estimated effect of the revisions to
the CBSA delineations and the transition wage index, in a budget-
neutral manner.
Column (7) shows the estimated effect of the 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 final
rule for FY 2021 to our estimates of payments per discharge in FY 2020.
The average estimated increase for all IRFs is approximately 2.8
percent. This estimated net increase includes the effects of the IRF
market basket increase factor for FY 2021 of 2.4 percent, reduced by a
productivity adjustment of 0.0 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 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 will be
expected to affect the estimated distribution of payments among
providers.

[[Page 48458]]

Table 13--IRF Impact Table for FY 2021
[Columns 4 through 8 in percentage]
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 21 wage
Number of Number of FY 21 wage index new Total
Facility classification IRFs cases Outlier index and CBSA and CMG weights percent
labor share 5% cap change \1\
(1) (2) (3) (4) (5) (6) (7) (8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total........................................................ 1,118 410,883 0.4 0.0 0.0 0.0 2.8
Urban unit................................................... 684 161,642 0.7 0.1 0.0 0.0 3.2
Rural unit................................................... 132 20,758 0.7 0.0 0.1 0.0 3.2
Urban hospital............................................... 291 223,421 0.2 0.0 0.0 0.0 2.5
Rural hospital............................................... 11 5,062 0.0 0.0 -0.2 0.0 2.2
Urban For-Profit............................................. 361 218,350 0.2 0.0 0.0 0.0 2.5
Rural For-Profit............................................. 33 8,487 0.3 0.0 0.0 0.0 2.6
Urban Non-Profit............................................. 521 145,259 0.7 0.1 0.0 0.0 3.2
Rural Non-Profit............................................. 89 14,171 0.8 0.0 0.0 0.0 3.2
Urban Government............................................. 93 21,454 0.7 -0.1 0.2 0.0 3.2
Rural Government............................................. 21 3,162 0.4 0.0 0.0 0.1 3.0
Urban........................................................ 975 385,063 0.4 0.0 0.0 0.0 2.8
Rural........................................................ 143 25,820 0.6 0.0 0.0 0.0 3.0
Urban by region:
Urban New England........................................ 29 16,117 0.4 -0.6 0.0 -0.1 2.1
Urban Middle Atlantic.................................... 132 48,820 0.5 0.4 -0.3 0.1 3.0
Urban South Atlantic..................................... 153 78,375 0.3 0.1 0.0 0.0 2.8
Urban East North Central................................. 159 50,217 0.5 0.2 0.0 0.0 3.1
Urban East South Central................................. 56 28,428 0.2 0.1 0.0 0.0 2.6
Urban West North Central................................. 73 21,136 0.5 -0.6 0.0 0.0 2.1
Urban West South Central................................. 188 85,336 0.3 0.1 0.1 0.1 3.0
Urban Mountain........................................... 87 30,648 0.4 -0.4 0.0 -0.1 2.3
Urban Pacific............................................ 98 25,986 0.8 -0.3 0.3 -0.1 3.2
Rural by region:
Rural New England........................................ 5 1,347 0.5 0.6 0.0 -0.2 3.3
Rural Middle Atlantic.................................... 11 1,189 1.1 0.4 0.0 0.0 4.0
Rural South Atlantic..................................... 16 3,796 0.4 -0.3 -0.3 0.0 2.2
Rural East North Central................................. 23 4,068 0.5 0.4 0.1 0.0 3.4
Rural East South Central................................. 21 4,442 0.3 0.0 0.0 -0.1 2.6
Rural West North Central................................. 20 3,047 0.8 -0.1 0.2 0.0 3.2
Rural West South Central................................. 39 7,005 0.5 -0.2 0.1 0.2 3.0
Rural Mountain........................................... 5 563 1.2 -0.2 0.0 0.1 3.5
Rural Pacific............................................ 3 363 1.8 0.7 0.0 0.0 5.0
Teaching status:
Non-teaching............................................. 1,012 363,781 0.4 0.0 0.0 0.0 2.8
Resident to ADC less than 10%............................ 60 32,585 0.5 0.0 0.2 0.0 3.1
Resident to ADC 10%-19%.................................. 34 12,988 0.8 0.3 -0.1 0.1 3.4
Resident to ADC greater than 19%......................... 12 1,529 0.4 0.1 0.2 0.1 3.1
Disproportionate share patient percentage (DSH PP):
DSH PP = 0%.............................................. 33 4,715 0.6 0.2 0.0 0.0 3.2
DSH PP <5%............................................... 142 60,645 0.3 0.1 -0.3 0.0 2.5
DSH PP 5%-10%............................................ 294 127,295 0.3 0.1 -0.1 0.0 2.8
DSH PP 10%-20%........................................... 393 147,404 0.4 -0.1 0.1 0.0 2.8
DSH PP greater than 20%.................................. 256 70,824 0.6 -0.1 0.1 0.0 3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column includes the impact of the updates in columns (4), (5), (6), and (7) above, and of the IRF market basket update for FY 2021 (2.4
percent), reduced by 0.0 percentage point for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.

4. Impact of the Update to the Outlier Threshold Amount
The estimated effects of the update to the outlier threshold
adjustment are presented in column 4 of Table 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
will equal 3 percent of total estimated payments for FY 2020.
For the FY 2021 IRF PPS proposed rule, we used 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. As we typically do between
the proposed and final rules each year, we updated our FY 2019 IRF
claims data to ensure that we are using the most recent available data
in setting IRF payments. Therefore, based on updated analysis of the
most recent IRF claims data for this final rule, we continue to
estimate that IRF outlier payments as a percentage of total estimated
IRF payments are 2.6 percent in FY 2021. Thus, we are adjusting the
outlier threshold amount in this final rule to maintain total estimated
outlier payments equal to 3 percent of total estimated payments in FY
2021. The estimated change in total 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

[[Page 48459]]

increase from approximately 2.6 percent to 3 percent.
The impact of this 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 Wage Index and Labor-Related Share
In column 5 of Table 13, we present the effects of the budget-
neutral update of the wage index and labor-related share. The changes
to the wage index and the labor-related share are discussed together
because the wage index is applied to the labor-related share portion of
payments, so the changes in the two have a combined effect on payments
to providers. As discussed in section VI.C. of this final rule, we are
updating the labor-related share from 72.7 percent in FY 2020 to 73.0
percent in FY 2021.
6. Impact of the Revisions to the OMB Delineations and the 5 Percent
Cap Transition Policy
In column 6 of Table 13, we present the effects of the budget-
neutral update of the geographic labor-market area designations under
the IRF PPS and the 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 VI.D.2. of this final rule, we are implementing 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 VI.D.3. of this final rule, we
are applying 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 adoption of the revised OMB
delineations under the IRF PPS.
7. Impact of the Update to the CMG Relative Weights and Average LOS
Values
In column 7 of Table 13, we present the effects of the budget-
neutral update of the CMG relative weights and average LOS values. In
the aggregate, we do not estimate that these updates will affect
overall estimated payments of IRFs. However, we do expect these updates
to have small distributional effects.
8. Effects of the Removal of the Post-Admission Physician Evaluation
As discussed in section VIII. of this final rule, we are removing
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 removal of the post-admission physician evaluation, as
discussed in section VIII. of this final rule. While we are removing
the post-admission physician requirement at Sec. 412.622(a)(4)(ii), we
are not removing any of the required face-to-face visits in Sec.
412.622(a)(3)(iv). Thus, the rehabilitation physician or non-physician
practitioners, as described in section X. of this final rule, will
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
this change 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 change.
9. Effects of the Amendment To Allow Non-Physician Practitioners To
Perform Some of the Weekly Visits That Are Currently Required To Be
Performed by a Rehabilitation Physician
As discussed in section X. of this final rule, we are amending the
regulations at Sec. 412.622(a)(3)(iv) to allow, beginning with the
second week of admission to the IRF, a non-physician practitioner who
is determined by the IRF to have specialized training and experience in
inpatient rehabilitation to conduct 1 of the 3 required face-to-face
visits with the patient per week, provided that such duties are within
the non-physician practitioner's scope of practice under applicable
state law. We believe this final rule represents a decrease in
administrative burden to rehabilitation physicians and providers
beginning in FY 2021, that is, for all IRF discharges on or after
October 1, 2020. We estimate the cost savings associated with this
change in the following way.
The requirement at Sec. 412.622(a)(3)(iv) must currently be
fulfilled by a rehabilitation physician; therefore, to estimate the
burden reduction of these 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 (http://www.bls.gov/ooh/healthcare/home.htm), which is $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 X. of this final 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
E.O. 13890 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 required face-to-face physician visits at
Sec. 412.622(a)(3)(iv) take, on average, 30 minutes each to complete.
In FY 2019, we estimate that there were approximately 1,117 total IRFs
and on average 366 discharges per IRF annually. A patient's average
length of stay in an IRF is 13 days. Therefore, we can estimate that on
average, each patient receives at least six physician visits during
their IRF admission. If each IRF has approximately 366 patients per
year, and on average each patient receives at least six face-to-face
visits with a rehabilitation physician that take an estimated 30
minutes each, annually the rehabilitation physician spends an estimated
1098 hours (366 patients x 6 visits x 0.5 hours) completing the
required face-to-face physician visits. Allowing a non-physician
practitioner to complete one of the required face-to-face visits for
each patient beginning with the patient's second week of admission and
estimating the patient's average length of stay is 13 days, we estimate
a reduction of 183 hours for rehabilitation physicians per IRF annually
(366 patients x 0.5 hours). We estimate a reduction of 204,411 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 willing to take full advantage 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
conduct one of the 3 required face-to-face visits in a patient's
average length of stay of 13 days would be $1.9 million ($17,019 x
1,117).
Please note that the $1.9 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

[[Page 48460]]

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 some of the
requirement at Sec. 412.622(a)(3)(iv) the overall savings to Medicare
Part B would be $1.5 million. However, we are unsure if all IRFs will
adopt this change. We are estimating that IRFs will adopt this change
for about 50 percent of the services provided. Therefore, we estimate
that the overall savings to the Medicare Trust Fund for allowing non-
physician practitioners to fulfill some of the requirement at Sec.
412.622(a)(3)(iv) would be $750,000.
We have also estimated the impacts of this 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 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.
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 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.
During a patient's average length of stay of 13 days, the
rehabilitation physician is currently required to see the patient a
minimum of six times. The current estimated total that physicians are
currently billing per IRF patient for 6 face-to-face visits is $439.56
($73.26 x 6 visits). 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 $179 million for these services ($439.56 x 366 patients x
1117 IRFs). For the purposes of this estimation, if we allow non-
physician practitioners to conduct one of the three face-to-face visits
beginning with the second week during a patient's admission with an
average length of stay of 13 days, the rehabilitation would complete
only 5 face-to-face visits during the patient's IRF admission.
Therefore, the estimated total that a physician would bill per IRF
patient for 5 face-to-face visits is $366.30 ($73.26 x 5 visits). We
estimate that on average each year physicians across all IRFs are
billing $149 million for these services ($366.30 x 366 patients x 1,117
IRFs).
According to the Medicare Benefit Policy Manual, chapter 15,
section 80 (Pub. L. 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 will bill $58.61 per face-to-face visit. Per
IRF patient with an average length of stay of 13 days, the non-
physician practitioner will bill an estimated $58.61. Therefore, we
estimate that on average each year a non-physician practitioner will
bill $24 million for these services ($58.61 x 366 x 1,117).
We estimate that if 100 percent of IRFs allowed non-physician
practitioners to fulfill some of the requirement at Sec.
412.622(a)(3)(iv) the overall savings to Medicare Part B would be $6
million. However, we are unsure that IRFs will adopt this change.
Commenters suggested that states do not have scope of practice laws
that are IRF specific and at least as focused on the clinical training
as necessitated through CMS requirements for a physician to practice in
an IRF. States have developed scope of practice laws around acute care
hospitals, rather than IRFs specifically, to allow NPPs to perform
visits to admitted patients. Also, since the average length of stay for
an IRF patient is 13 days, there would be limited opportunities for the
NPP visit to occur. Considering the broad permissibility under scope of
practice laws and average length of stays, we felt it was appropriate
to pick a midpoint in formulating our estimation. Therefore, we are
estimating that IRFs will adopt this change 50 percent of the time. To
obtain more information on which to base our estimates, we solicited
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.
We did not receive any comments regarding this request for
feedback. Therefore, we are finalizing our projected savings for the
portion of the proposal that we are finalizing. 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
one of the required physician visits at Sec. 412.622(a)(3)(iv)
beginning the second week of the patient's admission, we are assuming
that IRFs will adopt this change about 50 percent of the time. Thus,
the estimated overall savings to Medicare Part B will be $3 million. We
are estimating that 80 percent of that will remain in the Medicare
Trust Fund and 20 percent will be a savings to beneficiaries.
Therefore, we estimate $2.4 million in savings to the Medicare program
and $600,000 in savings to beneficiaries.

D. Alternatives Considered

The following is a discussion of the alternatives considered for
the IRF PPS updates contained in this final 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 final 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
update the IRF prospective payments in this final rule by 2.4 percent
(which equals the 2.4 percent estimated IRF market basket increase
factor for FY 2021 reduced by a 0.0 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 update

[[Page 48461]]

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 will 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 revisions to the OMB delineations as described in section VI.D. of
this final rule. However, this would not provide any time for IRF
providers to adapt to their new wage index values. Thus, we believe
that it is 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 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 VI.D. of this final rule,
we believe that using the most current OMB delineations will 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 will 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 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 are adjusting
the outlier threshold amount in this final 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. Additionally, we
considered codifying all of our longstanding required elements of the
pre-admission screening documentation. However, as discussed in section
IX. of this final rule, we believe that removing some of the pre-
admission screening elements that were duplicative of data collected in
various other documents in the patient's IRF medical record (such as
the history and physical and the individualized overall plan of care)
would reduce provider burden.
We considered not amending Sec. Sec. 412.622(a)(3)(iv) and
412.29(e) to allow, beginning with the second week of admission to the
IRF, a non-physician practitioner who is determined by the IRF to have
specialized training and experience in inpatient rehabilitation to
conduct 1 of the 3 required face-to-face visits with the patient per
week, provided that such duties are within the non-physician
practitioner's scope of practice under applicable state law. However,
we believe that it is critical, especially in light of the significant
changes in health care that have occurred as a result of the PHE for
the COVID-19 pandemic, for Medicare to recognize and expand the
valuable role that non-physician practitioners play in assisting the
rehabilitation physicians in implementing patients' plan of care in the
IRF. We intend to monitor the quality of care in IRFs closely to ensure
that the regulatory changes we are implementing improve care provided
to vulnerable IRF patients.
In addition, we considered amending Sec. 412.622(a)(3), (4), and
(5) to allow non-physician practitioners to perform all of the IRF
coverage requirements that are currently required to be performed by
rehabilitation physicians, provided that these duties are within the
practitioner's scope of practice under applicable state law. However,
as discussed in section X. of this final rule, we received many
comments from stakeholders expressing significant concerns about the
quality of care that the vulnerable IRF patients would receive if we no
longer required the rehabilitation physician to lead the care of the
patients. Thus, we determined that it would be prudent to finalize only
a portion of the proposed policy at this time. Based on extensive
clinical input by CMS's medical officers and after careful
consideration of these issues, we believe that the measured approach
that we are finalizing in this final rule balances the commenters'
concerns about maintaining the rehabilitation physician at the core of
the patient's plan of care in the IRF with the benefits of expanding
the role of non-physician practitioners, who play an important role in
the interdisciplinary team and the care of complex patients.

E. Regulatory Review Costs

If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this final rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on the FY 2021 IRF PPS proposed rule will be the number of
reviewers of this final rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this final rule. It is
possible that not all commenters reviewed the FY 2021 IRF PPS proposed
rule in detail, and it is also possible that some

[[Page 48462]]

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 final rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this final rule, and
therefore, for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. 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 $110.74 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 final rule. For each IRF that reviews
the rule, the estimated cost is $221.48 (2 hours x $110.74). Therefore,
we estimate that the total cost of reviewing this regulation is
$590,908.64 ($221.48 x 2,668 reviewers).

F. Accounting Statement and Table

As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 14, we have prepared an accounting statement showing
the classification of the expenditures associated with the provisions
of this final rule. Table 14 provides our best estimate of the increase
in Medicare payments under the IRF PPS as a result of the updates
presented in this final rule based on the data for 1,118 IRFs in our
database.

Table 14--Accounting Statement: Classification of Estimated Expenditure
------------------------------------------------------------------------
Category Transfers
-------------------------------------------
Change in estimated Annualized monetized $260 million
transfers from FY 2020 IRF transfers ---------------------
PPS to FY 2021 IRF PPS ---------------------- Federal government
to IRF Medicare
From whom to whom? providers
------------------------------------------------------------------------
Change in Estimated Costs:
------------------------------------------------------------------------
Category Costs
------------------------------------------------------------------------
Annualized monetized cost in FY 2021 for IRFs due Reduction of <= $3
to the amendment of certain IRF coverage million.
requirements
------------------------------------------------------------------------

G. Conclusion

Overall, the estimated payments per discharge for IRFs in FY 2021
are projected to increase by 2.8 percent, compared with the estimated
payments in FY 2020, as reflected in column 8 of Table 13.
IRF payments per discharge are estimated to increase by 2.8 percent
in urban areas and 3.0 percent in rural areas, compared with estimated
FY 2020 payments. Payments per discharge to rehabilitation units are
estimated to increase 3.2 percent in urban areas and 3.2 percent in
rural areas. Payments per discharge to freestanding rehabilitation
hospitals are estimated to increase 2.5 percent in urban areas and
increase 2.2 percent in rural areas.
Overall, IRFs are estimated to experience a net increase in
payments as a result of the proposed policies in this final rule. The
largest payment increase is estimated to be a 5.0 percent increase for
rural IRFs located in the Pacific region. The analysis above, together
with the remainder of this preamble, provides an RIA.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by OMB.

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 amends 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 412.29 is amended by revising paragraph (e) to read as
follows:

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

* * * * *
(e) Except for care furnished to patients in a freestanding IRF
hospital solely to relieve acute care hospital capacity in a state (or
region, as applicable) that is experiencing a surge, as defined in
Sec. 412.622, during the Public Health Emergency, as defined in Sec.
400.200 of this chapter, have in effect a procedure to ensure that
patients receive close medical supervision, as evidenced by at least 3
face-to-face visits per week by a licensed physician with specialized
training and experience in inpatient rehabilitation 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 the Public
Health Emergency, as defined in Sec. 400.200 of this chapter, for the
COVID-19 pandemic such visits may be conducted using telehealth
services (as defined in section 1834(m)(4)(F) of the Act). Beginning
with the second week, as defined in Sec. 412.622, of admission to the
IRF, a non-physician practitioner who is determined by the IRF to have
specialized training and experience in inpatient rehabilitation may
conduct 1 of the 3 required face-to-face visits with the patient per
week, provided that such duties are within the non-physician
practitioner's scope of practice under applicable state law.
* * * * *

0
3. 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.
The revisions and addition read as follows:

Sec. 412.622 Basis of payment.

(a) * * *
(3) * * *

[[Page 48463]]

(ii) Except during the emergency period described in section
1135(g)(1)(B) of the Act, 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) Except for care furnished to patients in a freestanding IRF
hospital solely to relieve acute care hospital capacity in a state (or
region, as applicable) that is experiencing a surge during the Public
Health Emergency, as defined in Sec. 400.200 of this chapter, 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). Beginning with the second week of admission
to the IRF, a non-physician practitioner who is determined by the IRF
to have specialized training and experience in inpatient rehabilitation
may conduct 1 of the 3 required face-to-face visits with the patient
per week, provided that such duties are within the non-physician
practitioner's scope of practice under applicable state law.
(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); and anticipated
discharge destination.
* * * * *
(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.

Dated: July 23, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

Dated: July 29, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-17209 Filed 8-4-20; 4:15 pm]
BILLING CODE 4120-01-P