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Analysis of FY 2017 IRF Final Rule Payment Data

Assessing gains and losses for FY 2017 IRF payments

On August 5, 2016, CMS published the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) for federal fiscal year 2017 to the Federal Register. This rule establishes the governing policy for all IRF PPS activity for the fiscal year beginning on October 1, 2016. In conjunction with the final rule, CMS released the FY 2017 data files on the CMS website.

The final rule reveals that for FY 2017, the IRF PPS standard payment will increase from $15,478 to $15,708, a total of $230. This represents an increase of 1.486%. This increase is calculated as a combination of the market basket increase and two separate budget neutrality factors.

In addition to setting a new standard payment rate, CMS also published the CMG relative weight and average length of stay for FY 2017. The CMG relative weight is a factor assigned to every CMG and tier combination and can be understood as a percentage of the standard payment, which will be paid for a patient who is categorized into that CMG/tier during the first three days of the IRF stay. For example:

$15,708 (standard rate) x 0.7992 (stroke 0101 tier 1 relative weight)
= $12,553.83 stroke 0101 tier 1 payment rate

CMS annually adjusts the relative weights for the 353 valid CMG and tier combinations to reflect an adjusted level of effort required to treat corresponding patients. This has the effect of changing the reimbursement amounts for each CMG/tier combination.  While, in total, the aggregate relative weights went up slightly, CMS applies a budget neutrality factor to the standard rate, which results in a budget neutral adjustment. CMS would have paid out the same amount of money under the FY 2017 rates as under prior year’s rates.

While the overall effect of the FY 2017 changes is budget neutral, the shifting of dollars across different CMG categories may have an effect on the reimbursement received by a given IRF with a given distribution of patient diagnoses. Mediware has performed a comparative analysis of each of the 23 rehabilitation impairment categories (RIC) and identified trends in the shift of relative weights that may impact the reimbursement levels of any given IRF.

RIC Relative Weight Change Analysis
RW Change Net % Up RIC
0.2127 20% 01 Stroke
0.1458 29% 02 Traumatic brain injury
-0.0362 25% 03 Non-traumatic brain injury
0.0228 30% 04 Traumatic spinal cord injury
0.2717 33% 05 Non-traumatic spinal cord injury
-0.0576 -38% 06 Neurological
0.1373 38% 07 Fracture of lower extremity
-0.2371 8% 08 Replacement of lower extremity joint
0.1358 38% 09 Other orthopedic
0.2514 67% 10 Amputation, lower extremity
-0.6930 -75% 11 Amputation, non-lower extremity
0.3197 50% 12 Osteoarthritis
0.1174 0% 13 Rheumatoid, other arthritis
-0.1281 -13% 14 Cardiac
-0.1583 0% 15 Pulmonary
-0.4685 17% 16 Pain syndrome
0.3625 38% 17 Major multiple trauma without brain or spinal cord injury
-0.1980 17% 18 Major multiple trauma with brain or spinal cord injury
-0.8508 -33% 19 Guillain Barré
0.0672 50% 20 Miscellaneous
0.2142 0% 21 Burns
0.0029 100% 50 Short stay
0.2031 50% 51 Expired


This analysis focuses primarily on two factors intended to provide a high-level summary of the shift of relative values and corresponding dollars.

Relative Weight (RW) Change:  This column represents net gains or losses (-) in the weights assigned to the CMG/tiers combinations for the RIC. A positive number indicates that the combined weight went up by the indicated amount, and that, relative to FY 2016, CMS will reimburse at a relatively higher rate for that RIC.

In the case of the RIC 01 stroke, the relative weight gain of +0.2127 indicates a shift toward the stroke category. A facility who treated a patient in each one of each of 40 CMG/tier combinations in the stroke RIC would see the effect of this as an increase of $3,341.09 in increased revenue over the FY 2016 reimbursement levels.

Net % Up:  This column represents the net percent of relative weights that went up in comparison to FY 2016. A positive number indicates that more CMG/tier relative values were adjusted up versus adjusted down.

In the case of the RIC 06 neurological, 11 of the 16 relative weights were adjusted down while only five were adjusted up. This yields a net up value of -6 (adjusted down), which is 38% of the CMG combinations.

A quick review of the table indicates that the RICs most favorably impacted by the changes are:

  • 01 Stroke
  • 02 Traumatic brain injury
  • 05 Non-traumatic spinal cord injury
  • 10 Amputation, lower extremity
  • 12 Osteoarthritis
  • 17 Major multiple trauma without brain or spinal cord injury

By the same token, the RICs most negatively impacted by the changes are:

  • 6 Neurological
  • 11 Amputation, non-lower extremity
  • 14 Cardiac
  • 19 Guillain Barré




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Useful Resources for Understanding the IRF-PAI 2017

As October 1 approaches and with it the new requirements associated with the IRF-PAI 2017, organizations must get up to speed with the details. For many organizations, this is a daunting learning curve. The natural tendency is to find someone who can “just tell me what to do.”

We recommend the following five resources as a great starting point to become familiar with the new requirements:

CMS has also published the materials from the May 18-19 training session in Dallas, Texas. You can find them under “Downloads” at the bottom of the page and review them to gain insight into the training, which was conducted last month.

In addition, at Mediware, we’ve been working closely with our clients to help them through the learning process. Over the course of the last few months, we’ve already conducted five webinars to help our clients get ready (and have even more planned for the months ahead). We have recommended these resources to all our clients and think the resources are an excellent foundation for any IRF to start the learning process.

If you’ve already read the materials and think you need a partner to help you manage the change (software, content, configuration, and workflow), give us a call at 480-555-1212  We would be happy to connect with you and have one of our IRF specialists discuss how we could be of value.

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How long do you really have for IRF-PAI 2017?

You know about the IRF-PAI 2017. You know you have to do something in preparation. You know it’s coming this fall. That’s months away, you tell yourself. There’s plenty of time to get ready. Or maybe not. If you stop to think in detail about what is involved in the process, you will likely feel some clarity and urgency about the need for action now.

You need to be ready early. Yes, the effective date is October 1, 2016. But that’s really the latest possible date that you could begin to comply. Most organizations recognize that waiting until the very last moment to try to make the change is a recipe for disaster. New content, new reporting, and new data requirements–along with an inflexible compliance date–do not make for a smooth or error-free transition.

The requirement is that any patient discharged on or after October 1, 2016 must be assessed using the new IRF-PAI. When will those patients be admitted? A significant percentage of the data that needs to be collected on those patients must be collected at admission–before the effects of therapy change the patient’s performance levels! Once past, it will be nearly impossible to go back and reconstruct the data that should have been documented at the outset of the episode.

What is your average length of stay? How long do some of your more acute patients stay? Subtract that amount of time from October 1 to figure out when you need to be ready.

You need to understand the requirements now. Unlike prior years, there are complex relationships among the data that has to be collected. There are rules that make the data valid or invalid. So before you can even start making changes, you need to make sure that someone in your organization understands what the requirements really demand of you. Being ready with the wrong requirements is the same as not being ready at all.

CMS published documents on its IRF-PAI website that describe the requirements. This is a good starting point to begin to learn what is required and what you will need to satisfy. You might also check out the IRF-PAI training website for more information about the new requirements.

If you’ve been thinking that you have four months before this becomes a real issue, you might want to think again. Given the two factors above, the time you really have could easily be cut in half–down to a real change timeline of two months.

The implication is clear: In order to be ready and avert chaos in your IRF, you should begin immediately.

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