Rehab centers face payment cuts: Medicare's yearly routine
Published Date: 4/30/2025
Proposed Rule
Summary
Starting in fiscal year 2026, inpatient rehab centers will see updated payment rates and changes to how patient cases are grouped and valued. The rule also continues cutting back extra payments for rural facilities and updates quality reporting rules to keep care top-notch. These changes affect rehab centers nationwide and could impact their funding and reporting starting October 1, 2025.
Analyzed Economic Effects
4 provisions identified: 0 benefits, 1 costs, 3 mixed.
FY2026 IRF Payment Rate Updates
Starting October 1, 2025, Medicare updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2026. If you run or own an IRF that bills Medicare, these rate changes will affect how much Medicare pays your facility for patient stays in FY 2026.
Changes to IRF Case-Mix Grouping
For FY 2026 (starting October 1, 2025), the rule proposes new classification and weighting factors for IRF case-mix groups that determine how patient stays are grouped and valued. If you run an IRF, these case-mix changes will affect how individual patient cases are counted and how payments are calculated under the Medicare IRF payment system.
Rural Adjustment Phaseout Continues
The rule continues the second year of a 3-year phaseout of the rural adjustment that began in FY 2025, affecting rural inpatient rehabilitation facilities in FY 2026. If your IRF is in a rural area, this phaseout reduces the extra payment adjustment that was previously applied.
Updates to IRF Quality Reporting Program
The proposed rule also includes updates to the Inpatient Rehabilitation Facility Quality Reporting Program (QRP) for FY 2026, effective October 1, 2025. If you operate an IRF, you will face changed quality reporting requirements and measures under Medicare for FY 2026.
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