CMS Expands IRF Review Choice Demonstration to Texas and California

CMS Expands IRF Review Choice Demonstration

What Texas and California Providers Need to Know

The Centers for Medicare & Medicaid Services is widening the scope of its Inpatient Rehabilitation Facility Review Choice Demonstration, adding Texas and California to a program already operating in Alabama and Pennsylvania. For IRFs across the industry, this signals a continued push toward heightened oversight of Medicare spending and compliance obligations.

While the expansion is expected to strengthen claim accuracy and reduce improper payments, it also raises new administrative challenges for facilities preparing to navigate the review process. And with deadlines already on the calendar, IRFs in these newly added states have little time to waste.

“Providers are already stretched thin. Adding another layer of review will only increase administrative pressure at a time when resources are limited.”
American Hospital Association

Key Dates that Matter

Under the expanded demonstration, IRFs must select either pre-claim or post-payment review. The choice is mandatory and tied to specific timelines.

• Texas IRFs must choose their review type by February 13, 2026, ahead of the program’s March 2, 2026 start.

• California IRFs have until April 14, 2026 to choose, with reviews beginning May 1, 2026.

These deadlines create operational pressure, particularly for IRFs that have not previously participated in the demonstration and may be unfamiliar with the workflow and documentation requirements the program demands.

Why CMS Is Expanding the Demonstration

CMS has made no secret of its long-term goal. The agency aims to reduce improper payments and improve claims accuracy in high-cost, high-variability settings. Inpatient rehabilitation services naturally fall under that umbrella.

The focus on compliance is not new, but the move into two of the country’s largest states marks a notable shift. It suggests that CMS believes the demonstration is working well enough to scale, or at minimum, that the agency sees opportunity for increased oversight in larger IRF markets.

“Accuracy in claims is essential for safeguarding Medicare funds, and demonstrations like this help us ensure that beneficiaries receive appropriate care.”
CMS Representative

What IRFs Should Prepare For

To manage the expansion effectively, IRFs will need to focus on process readiness, documentation quality, and timely submissions. Even organizations accustomed to strict compliance frameworks may find the demonstration’s cadence demanding.

A Brief Look at What Will Matter Most

• Documentation completeness and accuracy will directly impact review outcomes.

• Workflow adjustments may be required to move claims through pre-claim review without delaying admissions.

• Post-payment review may provide more operational flexibility but can increase financial risk if denials accumulate.

• Staff education will be essential to avoid unnecessary disruptions once the demonstration begins.

Industry Concerns and What Comes Next

Industry groups continue to voice concern that the demonstration creates burdens without clear evidence of improved outcomes. The American Hospital Association has been particularly vocal, arguing that IRFs already follow rigorous documentation rules and that further review requirements may divert resources away from patient care.

Despite the pushback, CMS appears committed to its review strategy. Providers in Texas and California should plan now for what is effectively a new operating reality in Medicare rehabilitation services.

The expansion is more than a regulatory update. It is an early look at how CMS may continue shaping oversight across the broader post-acute continuum. For IRFs, readiness today may prevent disruptions tomorrow, especially as compliance expectations tighten and financial scrutiny grows across the industry.