CMS proposes 2.8% payment update for IRFs for FY 2027

The Centers for Medicare & Medicaid Services April 1 released the fiscal year 2027 prospective payment system proposed rule for inpatient rehabilitation facilities. The rule would increase payments by 2.8% overall, which includes a 3.2% market basket update, reduced by a 0.8 percentage point productivity adjustment. CMS is also proposing a slight decrease in the outlier threshold, which would increase payments by 0.4 percentage points. Further, CMS proposes changes and clarifications to the IRF coverage rules, including that all therapies must be initiated within 36 hours of admission to the IRF, current functional status be documented at admission, and the initial interdisciplinary team meeting occur on or before the fourth day of admission. Finally, CMS has also included a request for information on modernizing the IRF PPS, including more closely aligning methodologies with those used for skilled nursing facilities.

For the IRF Quality Reporting Program, CMS proposes to shorten the timeframe for data submission at the end of each quarter from 4.5 months to 45 days beginning with FY 2029. CMS suggests this change would reduce the lag in public reporting and give IRFs access to more timely data for quality initiatives.

Comments are due on the proposed rule on June 1, 2026.