Inpatient Rehabilitation PPS

August 4, 2025

At A Glance

The Centers for Medicare & Medicaid Services (CMS) Aug. 1 issued its fiscal year (FY) 2026 final rule for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS). This rule updates IRF payments and modifies the IRF Quality Reporting Program (QRP) measures and reporting requirements.

KEY HIGHLIGHTS

The final rule will:

Update payments by a net 2.6%. This includes a market basket update of 3.3%, less a productivity cut of 0.7%.
Reduce the outlier threshold from $12,043 in FY 2025 to $10,062 in FY 2026, which will increase payments by an additional 0.6% relative to FY 2025.
Removes two measures and four SPADEs from the IRF QRP.

AHA TAKE

The final rule includes routine payment updates to the IRF PPS. However, the AHA remains concerned that market basket increases have not kept pace with the rise in hospital expenses in recent years, particularly for labor-intensive post-acute services such as inpatient rehabilitation.

Highlights from the rule follow.