CMS Proposed Rule Adjustments for Medicare Inpatient Rehabilitation Facilities FY 2027

On April 2, 2026, the Centers for Medicare & Medicaid Services (CMS) introduced a proposed rule aiming to adjust Medicare payment policies and rates for inpatient rehabilitation facilities under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for the fiscal year 2027. These updates form part of CMS’s annual regulatory compliance requirements.

For FY 2027, CMS plans to increase IRF PPS payment rates by 2.4%, following a market basket update of 3.2% minus a 0.8 percentage point productivity adjustment. The proposed changes also affect prospective payment rates, case-mix-group relative weights, and wage index, along with a detailed impact analysis. The IRF QRP enforces a two-percentage point penalty on facilities not meeting reporting standards, with proposed revisions to data submission deadlines that could alter compliance timelines.

Notable updates include a proposal to phase out IRF rural adjustments as facilities transition to urban classification, following updated Core-Based Statistical Area delineations. CMS aims to maintain outlier payment thresholds at 3.0% of total payments, projecting a $355 million increase in IRF payments for 2027. A modification to § 412.622(a)(3)(ii) would require therapies to commence within 36 hours post-admission to ensure consistent enforcement across CMS programs.

Proposed amendments to the IRF QRP for fiscal year 2029 involve shortening data submission timeframes to 45 days, aimed at reducing public data availability delays and enhancing access to actionable insights for patient families and internal IRF quality strategies. CMS is also evaluating case-mix classification methodologies adapted from the Skilled Nursing Facility Patient Driven Payment Model to modernize IRF payments, aligning them more closely with other post-acute payment models.

For the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program, CMS suggests altering bid surety bond amounts for Remote Item Delivery competitions to $100,000, maintaining $50,000 for other bids. This aims to standardize bidding practices and prevent inconsistencies. CMS will initiate education on bidding procedures for potential DMEPOS suppliers for Round 2028.

For a comprehensive view of the proposed rule, readers can refer to the Federal Register, while additional resources on IRF QRP and PPS are available on CMS's official website, providing further insights into these regulatory updates.