The IRF Prospective Payment System (PPS)

Under the Inpatient rehabilitation facilities (IRFs) Prospective Payment System (PPS) each patient is assigned to a case mix group (CMG) based on the primary condition for which the patient was admitted to the IRF and on the patient’s functional and cognitive abilities. Based on certain patient comorbidities, the patient is also assigned to a tier within each CMG. CMS makes a single prospective payment to the facility for the inpatient stay based on the relative resource intensity that would typically be associated with each patient’s clinical condition, as reflected in the relative weight assigned to each CMG and tier. The payment rate is then adjusted at the facility level for teaching status, the applicable geographic wage index, and the percentage of low-income patients served by the facility. IRFs in rural areas receive an additional payment adjustment. Cases with extraordinarily high costs compared to the prospectively set payment may qualify for an outlier payment.

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