GNYHA Comments on IRF Proposed Rule

June 13, 2022

On May 31, GNYHA submitted comments (attached) to the Centers for Medicare & Medicaid Services (CMS) on the fiscal year (FY) 2023 inpatient rehabilitation facility (IRF) prospective payment system (PPS) proposed rule. Specifically, GNYHA addressed the proposed calculation of the fixed-loss outlier threshold and CMS’s comment solicitation on the IRF transfer policy’s potential inclusion of early discharges to home health.

CMS proposed to increase the FY 2023 IRF PPS fixed-loss outlier threshold by 37% to $13,038. As in past years, CMS used the most recent available data to model FY 2023 outlier payments and estimate the proposed outlier threshold. CMS proposed to approximate FY 2023 charges by inflating FY 2021 charge data based on the changes from the prior year and to estimate FY 2023 cost-to-charge ratios (CCRs) by adjusting FY 2021 CCRs by the change from the prior year.

GNYHA is concerned that CMS’s estimated CCRs do not accurately represent FY 2023 IRF costs because CMS does not adjust for the impact of the COVID-19 public health emergency (PHE). Therefore, CMS’s methodology would result in an artificially high outlier threshold. GNYHA recommended that CMS adjust the IRF CCRs using data prior to the start of the PHE, which is consistent with CMS’s proposal in the IPPS proposed rule.

CMS also requested feedback on the potential inclusion of early discharges to home health in the IRF transfer policy, as recommended in a 2021 Office of Inspector General (OIG) report. The IRF transfer payment policy applies to IRF stays that are less than the average length of stay for the applicable case mix group and tier and are transferred directly to another institutional site. These discharges are paid at a lower rate. The OIG estimated that expanding the transfer policy to include early discharges to home health would reduce payments to IRFs by nearly $1 billion over a two-year period. While CMS did not propose any changes, it requested feedback on this potential policy shift.

GNYHA opposed including early discharges to home health in the IRF transfer policy, stating that CMS’s belief that, absent a transfer policy, IRFs have a financial incentive to discharge patients earlier than may be clinically appropriate is unreasonable. GNYHA argued that there is no evidence that an early discharge to home health—simply defined by CMS as one with a lower-than-average length of stay—is not clinically appropriate and highlighted the critical role of home health services in the care of IRF patients. Despite opposing inclusion of early discharges to home health in the IRF transfer policy, GNYHA recommended that if CMS were to adopt such a policy in the future, it should at least implement the change in a budget-neutral manner.

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