The Centers for Medicare & Medicaid Services late today released a proposed rule updating Medicare fee-for-service payments for the inpatient rehabilitation facility prospective payment system for fiscal year 2016. The regulation would implement a net payment increase of 1.7%, or $130 million, compared to FY 2015, after accounting for inflation and other adjustments. Specifically, CMS proposes an initial market-basket update of 2.7%, reduced by a productivity cut of 0.6 percentage points, 0.2 percentage points mandated by the Affordable Care Act and an additional 0.2 percentage points due to updating the outlier threshold. Beginning in FY 2016, CMS is proposing a new, IRF-specific market basket to replace the Rehabilitation, Psychiatric and Long-Term Care market basket that would be based on data from both freestanding and hospital-based IRFs. Also new in FY 2016, ICD-10-CM will become the required medical data code set for use on Medicare claims and for IRF patient assessment instrument submissions, and more restrictive coding changes will take effect for the IRF “60% Rule.” To meet the IRF Quality Reporting Program changes mandated in the Improving Medicare Post-Acute Care Transformation Act of 2014, CMS proposes to re-adopt one skin integrity measure and proposes six new measures assessing functional status and falls with injury. CMS also proposes to begin publicly reporting certain IRF QRP data in fall FY 2016. The IRF rule will be published in the April 27 Federal Register, and comments on the rule will be accepted through June 22. AHA staff are reviewing the rule and will provide further analysis.