Federal Register, Volume 85 Issue 77 (Tuesday, April 21, 2020)

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

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1729-P]
RIN 0938-AU05

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

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

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

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

ADDRESSES: In commenting, please refer to file code CMS-1729-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1729-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1729-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Gwendolyn Johnson, (410) 786-6954, for
general information.
Catie Cooksey, (410) 786-0179, for information about the IRF
payment policies and payment rates.
Kadie Derby, (410) 786-0468, for information about the IRF coverage
policies.

[[Page 22066]]

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period as soon as possible
after they have been received at http://www.regulations.gov. Follow the
search instructions on that website to view public comments.

Availability of Certain Information Through the Internet on the CMS
website

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

I. Executive Summary

A. Purpose

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

B. Summary of Major Provisions

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

C. Summary of Impact

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

II. Background

A. Statutory Basis and Scope

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

[[Page 22067]]

allowed IRFs to elect to bypass this blended payment and immediately be
paid 100 percent of the Federal IRF PPS rate. The transition
methodology expired as of cost reporting periods beginning on or after
October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100
percent of the Federal IRF PPS rate.
Section 1886(j) of the Act confers broad statutory authority upon
the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF
PPS final rule (70 FR 47880) and in correcting amendments to the FY
2006 IRF PPS final rule (70 FR 57166), we finalized a number of
refinements to the IRF PPS case-mix classification system (the CMGs and
the corresponding relative weights) and the case-level and facility-
level adjustments. These refinements included the adoption of the OMB's
Core-Based Statistical Area (CBSA) market definitions; modifications to
the CMGs, tier comorbidities; and CMG relative weights, implementation
of a new teaching status adjustment for IRFs; rebasing and revising the
market basket index used to update IRF payments, and updates to the
rural, low-income percentage (LIP), and high-cost outlier adjustments.
Beginning with the FY 2006 IRF PPS final rule (70 FR 47908 through
47917), the market basket index used to update IRF payments was a
market basket reflecting the operating and capital cost structures for
freestanding IRFs, freestanding inpatient psychiatric facilities
(IPFs), and long-term care hospitals (LTCHs) (hereinafter referred to
as the rehabilitation, psychiatric, and long-term care (RPL) market
basket). Any reference to the FY 2006 IRF PPS final rule in this
proposed rule also includes the provisions effective in the correcting
amendments. For a detailed discussion of the final key policy changes
for FY 2006, please refer to the FY 2006 IRF PPS final rule.
The regulatory history previously included in each rule or notice
issued under the IRF PPS is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index?redirect=/InpatientRehabFac PPS/.

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

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

C. Operational Overview of the Current IRF PPS

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

[[Page 22068]]

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

III. Summary of Provisions of the Proposed Rule

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

[[Page 22069]]

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

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

As specified in Sec. 412.620(b)(1), we calculate a relative weight
for each CMG that is proportional to the resources needed by an average
inpatient rehabilitation case in that CMG. For example, cases in a CMG
with a relative weight of 2, on average, will cost twice as much as
cases in a CMG with a relative weight of 1. Relative weights account
for the variance in cost per discharge due to the variance in resource
utilization among the payment groups, and their use helps to ensure
that IRF PPS payments support beneficiary access to care, as well as
provider efficiency.
In this proposed rule, we propose to update the CMG relative
weights and average length of stay values for FY 2021. As required by
statute, we always use the most recent available data to update the CMG
relative weights and average lengths of stay. For FY 2021, we propose
to use the FY 2019 IRF claims and FY 2018 IRF cost report data. These
data are the most current and complete data available at this time.
Currently, only a small portion of the FY 2019 IRF cost report data are
available for analysis, but the majority of the FY 2019 IRF claims data
are available for analysis. We are also proposing that if more recent
data become available after the publication of this proposed rule and
before the publication of the final rule, we would use such data to
determine the FY 2021 CMG relative weights and average length of stay
values in the final rule.
We are proposing to apply these data using the same methodologies
that we have used to update the CMG relative weights and average length
of stay values each FY since we implemented an update to the
methodology to use the more detailed CCR data from the cost reports of
IRF provider units of primary acute care hospitals, instead of CCR data
from the associated primary care hospitals, to calculate IRFs' average
costs per case, as discussed in the FY 2009 IRF PPS final rule (73 FR
46372). In calculating the CMG relative weights, we use a hospital-
specific relative value method to estimate operating (routine and
ancillary services) and capital costs of IRFs. The process used to
calculate the CMG relative weights for this proposed rule is as
follows:
Step 1. We estimate the effects that comorbidities have on costs.
Step 2. We adjust the cost of each Medicare discharge (case) to
reflect the effects found in the first step.
Step 3. We use the adjusted costs from the second step to calculate
CMG relative weights, using the hospital-specific relative value
method.
Step 4. We normalize the FY 2021 CMG relative weights to the same
average CMG relative weight from the CMG relative weights implemented
in the FY 2020 IRF PPS final rule (84 FR 39054).
Consistent with the methodology that we have used to update the IRF
classification system in each instance in the past, we propose to
update the CMG relative weights for FY 2021 in such a way that total
estimated aggregate payments to IRFs for FY 2021 are the same with or
without the changes (that is, in a budget-neutral manner) by applying a
budget neutrality factor to the standard payment amount. To calculate
the appropriate budget neutrality factor for use in updating the FY
2021 CMG relative weights, we use the following steps:
Step 1. Calculate the estimated total amount of IRF PPS payments
for FY 2021 (with no changes to the CMG relative weights).
Step 2. Calculate the estimated total amount of IRF PPS payments
for FY 2021 by applying the proposed changes to the CMG relative
weights (as discussed in this proposed rule).
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2 to determine the budget neutrality factor of
0.9969 that would maintain the same total estimated aggregate payments
in FY 2021 with and without the proposed changes to the CMG relative
weights.
Step 4. Apply the budget neutrality factor from step 3 to the FY
2021 IRF PPS standard payment amount after the application of the
budget-neutral wage adjustment factor.
In section V.D. of this proposed rule, we discuss the proposed use
of the existing methodology to calculate the proposed standard payment
conversion factor for FY 2021.
In Table 2, ``Proposed Relative Weights and Average Length of Stay
Values for Case-Mix Groups,'' we present the CMGs, the comorbidity
tiers, the corresponding relative weights, and the average length of
stay values for each CMG and tier for FY 2021. The average length of
stay for each CMG is used to determine when an IRF discharge meets the
definition of a short-stay transfer, which results in a per diem case
level adjustment.
BILLING CODE 4120-01-P

[[Page 22070]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.000

[[Page 22071]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.001

[[Page 22072]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.002

[[Page 22073]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.003

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

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

As shown in Table 3, 99.3 percent of all IRF cases are in CMGs and
tiers that would experience less than a 5 percent change (either
increase or decrease) in the CMG relative weight value as a result of
the proposed revisions for FY 2021. The proposed changes in the average
length of stay values for FY 2021, compared with the FY 2020 average
length of stay values, are small and do not show any particular trends
in IRF length of stay patterns.
We invite public comment on our proposed updates to the CMG
relative weights and average length of stay values for FY 2021.

V. Proposed FY 2021 IRF PPS Payment Update

A. Background

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

[[Page 22074]]

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

B. Proposed FY 2021 Market Basket Update and Productivity Adjustment

For FY 2021 (that is, beginning October 1, 2020 and ending
September 30, 2021), we propose to update the IRF PPS payments by a
market basket increase factor as required by section 1886(j)(3)(C) of
the Act, with a productivity adjustment as required by section
1886(j)(3)(C)(ii)(I) of the Act. For FY 2021, we propose to use the
same methodology described in the FY 2020 IRF PPS final rule (84 FR
39085) to compute the FY 2021 market basket increase factor to update
the IRF PPS base payment rate.
Consistent with historical practice, we are proposing to estimate
the market basket update for the IRF PPS based on IHS Global Inc.'s
(IGI's) forecast using the most recent available data. IGI is a
nationally-recognized economic and financial forecasting firm with
which we contract to forecast the components of the market baskets and
multifactor productivity (MFP). Based on IGI's fourth quarter 2019
forecast with historical data through the third quarter of 2019, the
2016-based IRF market basket increase factor for FY 2021 is projected
to be 2.9 percent. Therefore, we are proposing that the 2016-based IRF
market basket increase factor for FY 2021 would be 2.9 percent. We are
also proposing that if more recent data become available after the
publication of this proposed rule and before the publication of the
final rule (for example, a more recent estimate of the market basket
update), we would use such data to determine the FY 2021 market basket
update in the final rule.
According to section 1886(j)(3)(C)(i) of the Act, the Secretary
shall establish an increase factor based on an appropriate percentage
increase in a market basket of goods and services. Section
1886(j)(3)(C)(ii) of the Act then requires that, after establishing the
increase factor for a FY, the Secretary shall reduce such increase
factor for FY 2012 and each subsequent FY, by the productivity
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of
this productivity adjustment. The statute defines the productivity
adjustment to be equal to the 10-year moving average of changes in
annual economy-wide, private nonfarm business MFP (as projected by the
Secretary for the 10-year period ending with the applicable FY, year,
cost reporting period, or other annual period) (the ``MFP
adjustment''). The U.S. Department of Labor's Bureau of Labor
Statistics (BLS) publishes the official measure of private nonfarm
business MFP. Please see 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 MFP adjustment for FY
2021 (the 10-year moving average of MFP for the period ending FY 2021)
is projected to be 0.4 percent. Thus, in accordance with section
1886(j)(3)(C) of the Act, we are proposing to base the FY 2021 market
basket update, which is used to determine the applicable percentage
increase for the IRF payments, on the 2016-based IRF market basket. We
are proposing to then reduce this percentage increase by the estimated
MFP adjustment for FY 2021 of 0.4 percentage point (the 10-year moving
average of MFP for the period ending FY 2021 based on IGI's fourth
quarter 2019 forecast). Therefore, the proposed FY 2021 IRF update
would be 2.5 percent (2.9 percent market basket update, less 0.4
percentage point MFP adjustment). Furthermore, we are proposing that if
more recent data become available after the publication of this
proposed rule and before the publication of the final rule (for
example, a more recent estimate of the market basket and MFP
adjustment), we would use such data to determine the FY 2021 market
basket update and MFP adjustment in the final rule.
For FY 2021, the Medicare Payment Advisory Commission (MedPAC)
recommends that we reduce IRF PPS payment rates by 5 percent. As
discussed, and in accordance with sections 1886(j)(3)(C) and
1886(j)(3)(D) of the Act, the Secretary is proposing to update the IRF
PPS payment rates for FY 2021 by an adjusted market basket increase
factor of 2.5 percent, as section 1886(j)(3)(C) of the Act does not
provide the Secretary with the authority to apply a different update
factor to IRF PPS payment rates for FY 2021.
We invite public comment on the proposed market basket update and
productivity adjustment.

C. Proposed Labor-Related Share for FY 2021

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

[[Page 22075]]

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

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

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

D. Proposed Wage Adjustment for FY 2021

1. Background
Section 1886(j)(6) of the Act requires the Secretary to adjust the
proportion of rehabilitation facilities' costs attributable to wages
and wage-related costs (as estimated by the Secretary from time to
time) by a factor (established by the Secretary) reflecting the
relative hospital wage level in the geographic area of the
rehabilitation facility compared to the national average wage level for
those facilities. The Secretary is required to update the IRF PPS wage
index on the basis of information available to the Secretary on the
wages and wage-related costs to furnish rehabilitation services. Any
adjustment or updates made under section 1886(j)(6) of the Act for a FY
are made in a budget-neutral manner.
For FY 2021, we propose to maintain the policies and methodologies
described in the FY 2020 IRF PPS final rule (84 FR 39090) related to
the labor market area definitions and the wage index methodology for
areas with wage data. Thus, we propose to use the CBSA labor market
area definitions and the FY 2021 pre-reclassification and pre-floor
hospital wage index data. In accordance with section 1886(d)(3)(E) of
the Act, the FY 2021 pre-reclassification and pre-floor hospital wage
index is based on data submitted for hospital cost reporting periods
beginning on or after October 1, 2016, and before October 1, 2017 (that
is, FY 2017 cost report data).
The labor market designations made by the OMB include some
geographic areas where there are no hospitals and, thus, no hospital
wage index data on which to base the calculation of the IRF PPS wage
index. We propose to continue to use the same methodology discussed in
the FY 2008 IRF PPS final rule (72 FR 44299) to address those
geographic areas where there are no hospitals and, thus, no hospital
wage index data on which to base the calculation for the FY 2021 IRF
PPS wage index.
2. Core-Based Statistical Areas (CBSAs) for the FY 2021 IRF Wage Index
a. Background
The wage index used for the IRF PPS is calculated using the pre-
reclassification and pre-floor inpatient PPS (IPPS) wage index data and
is assigned to the IRF on the basis of the labor market area in which
the IRF is geographically located. IRF labor market areas are
delineated based on the CBSAs established by the OMB. The current CBSA
delineations (which were implemented for the IRF PPS beginning with FY
2016) are based on revised OMB delineations issued on February 28,
2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established
revised delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas in the United States
and Puerto Rico based on the 2010 Census, and provided guidance on the
use of the delineations of these statistical areas using standards
published in the June 28, 2010 Federal Register (75 FR 37246 through
37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068
through 47076) for a full discussion of our implementation of the OMB
labor market area delineations beginning with the FY 2016 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses. On July 15, 2015, OMB issued
OMB Bulletin No. 15-01, which provides minor updates to and supersedes
OMB Bulletin No. 13-01 that was issued on February 28, 2013. The
attachment to OMB Bulletin No. 15-01 provides detailed information on
the update to statistical areas since February 28, 2013. The updates
provided in OMB Bulletin No. 15-01 are based on the application of the
2010 Standards for Delineating Metropolitan and Micropolitan
Statistical Areas to Census Bureau population estimates for July 1,
2012 and July 1, 2013.
In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we
adopted the updates set forth in OMB Bulletin

[[Page 22076]]

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

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

[[Page 22077]]

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

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

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

[[Page 22078]]

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

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

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

[[Page 22079]]

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

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

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

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

[[Page 22080]]

impacts on IRFs following the adoption of the new CBSA delineations
based on the 2010 decennial census data in the FY 2016 IRF PPS final
rule (80 FR 47035). Specifically, we implemented a 1-year blended wage
index for all IRFs due to our adoption of the revised delineations.
This required calculating and comparing two wage indexes for each IRF
since that blended wage index was computed as the sum of 50 percent of
the FY 2016 IRF PPS wage index values under the FY 2015 CBSA
delineations and 50 percent of the FY 2016 IRF PPS wage index values
under the FY 2016 new OMB delineations. While we believed that using
the new OMB delineations would create a more accurate payment
adjustment for differences in area wage levels, we also recognized that
adopting such changes may cause some short-term instability in IRF PPS
payments, in particular for IRFs that would be negatively impacted by
the proposed adoption of the updates to the OMB delineations. For
example, IRF's currently located in CBSA 35614 (New York-Jersey City-
White Plains, NY-NJ) that would be located in new CBSA 35154 (New
Brunswick-Lakewood, NJ) under the proposed changes to the CBSA-based
labor market area delineations would experience a nearly 17 percent
decrease in the wage index as a result of the proposed change.
Therefore, consistent with past practice we are proposing a transition
policy to help mitigate any significant negative impacts that IRFs may
experience due to our proposal to adopt the revised OMB delineations
under the IRF PPS. Specifically, for FY 2021 as a transition, we are
proposing to apply a 5 percent cap on any decrease in an IRF's wage
index from the IRF's wage index from the prior FY. This transition
would allow the effects of our proposed adoption of the revised OMB
delineations to be phased in over 2 years, where the estimated
reduction in an IRF's wage index would be capped at 5 percent in FY
2021 (that is, no cap would be applied to any reductions in the wage
index for the second year (FY 2022)). We believe a 5 percent cap on the
overall decrease in an IRF's wage index value would be an appropriate
transition as it would effectively mitigate any significant decreases
in an IRF's wage index for FY 2021.
Furthermore, consistent with the requirement at Sec. 412.624(e)(1)
that changes to area wage level adjustment are made in a budget neutral
manner, we are proposing that this proposed transitional wage index
would not result in any change in estimated aggregate IRF PPS payments
by applying a budget neutrality factor to the standard payment
conversion factor. Our proposed methodology for calculating this
proposed budget neutrality factor is discussed below in section V.D.4.
of this proposed rule.
We invite comments on our proposed implementation of the new OMB
delineations and our proposed transition methodology.
4. Proposed Wage Adjustment
To calculate the wage-adjusted facility payment for the proposed
payment rates set forth in this proposed rule, we would multiply the
proposed unadjusted Federal payment rate for IRFs by the FY 2021 labor-
related share based on the 2016-based IRF market basket relative
importance (72.9 percent) to determine the labor-related portion of the
standard payment amount. A full discussion of the calculation of the
labor-related share is located in section V.C. of this proposed rule.
We would then multiply the labor-related portion by the applicable IRF
wage index. The wage index tables are available on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/IRF-Rules-and-Related-Files.html.
Adjustments or updates to the IRF wage index made under section
1886(j)(6) of the Act must be made in a budget-neutral manner. We
propose to calculate a budget-neutral wage adjustment factor as
established in the FY 2004 IRF PPS final rule (68 FR 45689), codified
at Sec. 412.624(e)(1), as described in the steps below. We propose to
use the listed steps to ensure that the FY 2021 IRF standard payment
conversion factor reflects the proposed update to the wage indexes
(based on the FY 2017 hospital cost report data and taking into account
the proposed revisions to the OMB delineations and the transition
policy) and the proposed update to the labor-related share, in a
budget-neutral manner:
Step 1. Calculate the total amount of estimated IRF PPS payments
using the labor-related share and the wage indexes from FY 2020 (as
published in the FY 2020 IRF PPS final rule (84 FR 39054)).
Step 2. Calculate the total amount of estimated IRF PPS payments
using the proposed FY 2021 wage index values (based on updated hospital
wage data and taking into account the proposed changes to geographic
labor market area delineations and the transition policy) and the
proposed FY 2021 labor-related share of 72.9 percent.
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the proposed FY 2021
budget-neutral wage adjustment factor of 0.9999.
Step 4. Apply the budget neutrality factor from step 3 to the FY
2021 IRF PPS standard payment amount after the application of the
increase factor to determine the proposed FY 2021 standard payment
conversion factor.
We discuss the calculation of the proposed standard payment
conversion factor for FY 2021 in section V.E. of this proposed rule.
We invite public comment on the proposed IRF wage adjustment for FY
2021.

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

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

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

[[Page 22081]]

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

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

[[Page 22082]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.004

[[Page 22083]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.005

[[Page 22084]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.006

BILLING CODE 4120-01-C

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

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

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

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

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

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

Section 1886(j)(4) of the Act provides the Secretary with the
authority to make payments in addition to the basic IRF prospective
payments for cases incurring extraordinarily high costs. A case
qualifies for an outlier payment if the estimated cost of the case
exceeds the adjusted outlier threshold. We calculate the adjusted
outlier threshold by adding the IRF PPS payment for the case (that is,
the CMG payment adjusted by all of the relevant facility-level
adjustments) and the adjusted threshold amount (also adjusted by all of
the relevant facility-level adjustments).

[[Page 22085]]

Then, we calculate the estimated cost of a case by multiplying the
IRF's overall CCR by the Medicare allowable covered charge. If the
estimated cost of the case is higher than the adjusted outlier
threshold, we make an outlier payment for the case equal to 80 percent
of the difference between the estimated cost of the case and the
outlier threshold.
In the FY 2002 IRF PPS final rule (66 FR 41362 through 41363), we
discussed our rationale for setting the outlier threshold amount for
the IRF PPS so that estimated outlier payments would equal 3 percent of
total estimated payments. For the 2002 IRF PPS final rule, we analyzed
various outlier policies using 3, 4, and 5 percent of the total
estimated payments, and we concluded that an outlier policy set at 3
percent of total estimated payments would optimize the extent to which
we could reduce the financial risk to IRFs of caring for high-cost
patients, while still providing for adequate payments for all other
(non-high cost outlier) cases.
Subsequently, we updated the IRF outlier threshold amount in the
FYs 2006 through 2020 IRF PPS final rules and the FY 2011 and FY 2013
notices (70 FR 47880, 71 FR 48354, 72 FR 44284, 73 FR 46370, 74 FR
39762, 75 FR 42836, 76 FR 47836, 76 FR 59256, 77 FR 44618, 78 FR 47860,
79 FR 45872, 80 FR 47036, 81 FR 52056, 82 FR 36238, 83 FR 38514, and 84
FR 39054, respectively) to maintain estimated outlier payments at 3
percent of total estimated payments. We also stated in the FY 2009
final rule (73 FR 46370 at 46385) that we would continue to analyze the
estimated outlier payments for subsequent years and adjust the outlier
threshold amount as appropriate to maintain the 3 percent target.
To update the IRF outlier threshold amount for FY 2021, we propose
to use FY 2019 claims data and the same methodology that we used to set
the initial outlier threshold amount in the FY 2002 IRF PPS final rule
(66 FR 41316 and 41362 through 41363), which is also the same
methodology that we used to update the outlier threshold amounts for
FYs 2006 through 2020. The outlier threshold is calculated by
simulating aggregate payments and using an iterative process to
determine a threshold that results in outlier payments being equal to 3
percent of total payments under the simulation. To determine the
outlier threshold for FY 2021, we estimate the amount of FY 2021 IRF
PPS aggregate and outlier payments using the most recent claims
available (FY 2019) and the proposed FY 2021 standard payment
conversion factor, labor-related share, and wage indexes, incorporating
any applicable budget-neutrality adjustment factors. The outlier
threshold is adjusted either up or down in this simulation until the
estimated outlier payments equal 3 percent of the estimated aggregate
payments. Based on an analysis of the preliminary data used for the
proposed rule, we estimated that IRF outlier payments as a percentage
of total estimated payments would be approximately 2.6 percent in FY
2020. Therefore, we propose to update the outlier threshold amount from
$9,300 for FY 2020 to $8,102 for FY 2021 to maintain estimated outlier
payments at approximately 3 percent of total estimated aggregate IRF
payments for FY 2021.
We invite public comment on the proposed update to the FY 2021
outlier threshold amount to maintain estimated outlier payments at
approximately 3 percent of total estimated IRF payments.

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

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

[[Page 22086]]

and the urban/rural averages for FY 2021.

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

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

[[Page 22087]]

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

VIII. Proposed Revisions to Certain IRF Coverage Documentation
Requirements

A. Codification of Existing Preadmission Screening Documentation
Instructions and Guidance

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

[[Page 22088]]

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

B. Definition of a ``Week''

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

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

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

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

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

[[Page 22089]]

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

[[Page 22090]]

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

X. Method for Applying the Reduction to the FY 2021 IRF Increase Factor
for IRFs That Fail To Meet the Quality Reporting Requirements

As previously noted, section 1886(j)(7)(A)(i) of the Act requires
the application of a 2-percentage point reduction of the applicable
market basket increase factor for payments for discharges occurring
during such FY for IRFs that fail to comply with the quality data
submission requirements. In accordance with Sec. 412.624(c)(4)(i), we
apply a 2-percentage point reduction to the applicable FY 2021 market
basket increase factor in calculating an adjusted FY 2021 standard
payment conversion factor to apply to payments for only those IRFs that
failed to comply with the data submission requirements. As previously
noted, application of the 2-percentage point reduction may result in an
update that is less than 0.0 for a FY and in payment rates for a FY
being less than such payment rates for the preceding FY. Also,
reporting-based reductions to the market basket increase factor are not
cumulative; they only apply for the FY involved.
Table 12 shows the calculation of the proposed adjusted FY 2021
standard payment conversion factor that would be used to compute IRF
PPS payment rates for any IRF that failed to meet the quality reporting
requirements for the applicable reporting period.

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

XI. Collection of Information Requirements

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

XII. Response to Comments

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

XIII. Regulatory Impact Analysis

A. Statement of Need

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

[[Page 22091]]

required to be performed by a rehabilitation physician.

B. Overall Impact

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

C. Anticipated Effects

1. Effects on IRFs
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most IRFs and most other providers and
suppliers are small entities, either by having revenues of $8.0 million
to $41.5 million or less in any 1 year depending on industry
classification, or by being nonprofit organizations that are not
dominant in their markets. (For details, see the Small Business
Administration's final rule that set forth size standards for health
care industries, at 65 FR 69432 at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf, effective January 1, 2017 and updated on August 19, 2019.) Because
we lack data on individual hospital receipts, we cannot determine the
number of small proprietary IRFs or the proportion of IRFs' revenue
that is derived from Medicare payments. Therefore, we assume that all
IRFs (an approximate total of 1,120 IRFs, of which approximately 55
percent are nonprofit facilities) are considered small entities and
that Medicare payment constitutes the majority of their revenues. HHS
generally uses a revenue impact of 3 to 5 percent as a significance
threshold under the RFA. As shown in Table 13, we estimate that the net
revenue impact of this proposed rule on all IRFs is to increase
estimated payments by approximately 2.9 percent. However, we find that
certain categories of IRF providers would be expected to experience
revenue impacts in the 3 to 5 percent range. We estimate a 3.2 percent
overall impact for rural IRFs. Additionally, we estimate a 3.1 percent
overall impact for teaching IRFs with a resident to average daily
census ratio of less than 10 percent, a 3.6 percent overall impact for
teaching IRFs with resident to average daily census ratio of 10 to 19
percent, and a 3.3 percent overall impact for teaching IRFs with a
resident to average daily census ratio greater than 19 percent. Also,
we estimate a 3.4 percent overall impact for IRFs with a DSH patient
percentage of 0 percent and a 3.2 percent overall impact for IRFs with
a DSH patient percentage greater than 20 percent. As a result, we
anticipate this proposed rule would have a positive impact on a
substantial number of small entities. MACs are not considered to be
small entities. Individuals and states are not included in the
definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area and has fewer
than 100 beds. As shown in Table 13, we estimate that the net revenue
impact of this proposed rule on rural IRFs is to increase estimated
payments by approximately 3.2 percent based on the data of the 132
rural units and 11 rural hospitals in our database of 1,117 IRFs for
which data were available. We estimate an overall impact for rural IRFs
in all areas except Rural New England, Rural South Atlantic, and Rural
East South Central of between 3.2 percent and 4.8 percent. As a result,
we anticipate this proposed rule would have a positive impact on a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-04, enacted March 22, 1995) (UMRA) also requires that agencies
assess anticipated costs and benefits before issuing any rule whose
mandates require spending in any 1 year of $100 million in 1995
dollars, updated annually for inflation. In 2020, that threshold is
approximately $156 million. This proposed rule does not mandate any
requirements for State, local, or tribal governments, or for the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has federalism
implications. As stated, this proposed rule will not have a substantial
effect on state and local governments, preempt state law, or otherwise
have a federalism implication.
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017 and requires that the
costs associated with significant new regulations ``shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least two prior regulations.''

[[Page 22092]]

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

[[Page 22093]]

DSH PP less than 5 percent, IRFs with a DSH PP between 5 and less than
10 percent, IRFs with a DSH PP between 10 and 20 percent, and IRFs with
a DSH PP greater than 20 percent.
The estimated impacts of each policy described in this rule to the
facility categories listed are shown in the columns of Table 13. The
description of each column is as follows:
Column (1) shows the facility classification categories.
Column (2) shows the number of IRFs in each category in
our FY 2021 analysis file.
Column (3) shows the number of cases in each category in
our FY 2021 analysis file.
Column (4) shows the estimated effect of the proposed
adjustment to the outlier threshold amount.
Column (5) shows the estimated effect of the proposed
update to the IRF labor-related share and wage index, in a budget-
neutral manner.
Column (6) shows the estimated effect of the proposed
revisions to the CBSA delineations and the transition wage index, in a
budget-neutral manner.
Column (7) shows the estimated effect of the proposed
update to the CMG relative weights and average LOS values, in a budget-
neutral manner.
Column (8) compares our estimates of the payments per
discharge, incorporating all of the policies reflected in this proposed
rule for FY 2021 to our estimates of payments per discharge in FY 2020.
The average estimated increase for all IRFs is approximately 2.9
percent. This estimated net increase includes the effects of the
proposed IRF market basket increase factor for FY 2021 of 2.9 percent,
reduced by a productivity adjustment of 0.4 percentage point in
accordance with section 1886(j)(3)(C)(ii)(I) of the Act. It also
includes the approximate 0.4 percent overall increase in estimated IRF
outlier payments from the proposed update to the outlier threshold
amount. Since we are making the updates to the IRF wage index, labor-
related share and the CMG relative weights in a budget-neutral manner,
they will not be expected to affect total estimated IRF payments in the
aggregate. However, as described in more detail in each section, they
would be expected to affect the estimated distribution of payments
among providers.
BILLING CODE 4120-01-P

[[Page 22094]]

[GRAPHIC] [TIFF OMITTED] TP21AP20.007

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

[[Page 22095]]

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

[[Page 22096]]

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

[[Page 22097]]

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

D. Alternatives Considered

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

[[Page 22098]]

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

E. Regulatory Review Costs

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

F. Accounting Statement and Table

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in Table 14, we have prepared an accounting statement showing
the classification of the expenditures associated with the provisions
of this proposed rule. Table 14 provides our best estimate of the
increase in Medicare payments under the IRF PPS as a result of the
proposed updates presented in this proposed rule based on the data for
1,117 IRFs in our database.

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

G. Conclusion

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

[[Page 22099]]

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

List of Subjects in 42 CFR Part 412

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

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

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

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

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

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

Sec. 412.622 Basis of payment.

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

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