Inpatient Rehabilitation PPS

April 7, 2026

The Centers for Medicare & Medicaid Services (CMS) April 2 issued its proposed rule for the inpatient rehabilitation facility (IRF) prospective payment system (PPS) for fiscal year (FY) 2027. This rule would update IRF PPS payments relative to the current fiscal year, modify and clarify coverage rules, and update the quality reporting program (QRP).

KEY HIGHLIGHTS

The proposed rule would:

Update payment rates by a net 2.8%. This includes a proposed market basket update of 3.2%, less a productivity cut of 0.8 percentage points. There would also be a 0.4% increase related to outlier payments.
Update and clarify the IRF coverage rules, including requiring that all therapies must be initiated within 36 hours of admission to the IRF, current functional status must be documented at admission, and the initial interdisciplinary team meeting must occur on or before the fourth day of admission.
Shorten the timeframe for submitting IRF QRP program data at the end of each quarter from 4.5 months to 45 days.
Requests information on the modernization of the IRF PPS by replacing the current system with new IRF clinical categories and comorbidity score bins.

AHA TAKE

The proposed rule includes routine payment updates as well as targeted clarifications and minor revisions to IRF coverage and documentation requirements. CMS is also requesting stakeholder input on a potentially significant redesign of the IRF PPS that would align it more closely with the methodology used under the skilled-nursing facility (SNF) PPS. Given the scope of this potential change, the AHA will closely evaluate the approach in consultation with members.