Summary of Changes to IRF Payment Rates for FY 2019

by Nirmala Sivakumar, CCS, CDIP

The Centers for Medicare and Medicaid Services (CMS) published the FY (fiscal year) 2019 Inpatient Rehabilitation Facility Prospective Payment System final rule in the August 6th, 2018 Federal Register. The final rule reflects the annual update to the Medicare fee-for-service (FFS) IRF payment rates and policies. The overall impact of this final rule is estimated to be $105 million in increased payments to IRF’s.

Link to the online version of the final rule:

For FY 2019, CMS finalized most of the payment changes that it had published in the FY 2019 IRF PPS proposed rule. CMS is updating the IRF PPS payments to reflect an estimated 1.35 percent increase factor which reflects an IRF market basket update of 2.9 % and is reduced by a 0.8 percentage point multifactor productivity adjustment and 0.75 percentage point mandatory law requirement (the update for an IRF that does not submit required quality data is reduced by 2.0 percentage points). The final IRF standard conversion rate for FY 2019 will increase from $15,838 to $16,021.

Every year, CMS updates the CMG (case mix group) relative weights and average lengths of stays (ALOS) with the most recent available data. CMS will update these factors for FY 2019 using FY 2017 claims data and FY 2016 IRF cost reports. To compensate for the CMG weights changes, CMS will apply a FY 2019 case-mix budget neutrality factor of 0.9981. As a result, the total estimated aggregate payments to IRF’s for FY 2019 will not be affected. However, the revisions will affect the distribution of payments within CMG’s and tiers.

CMS estimates that 99.3% of IRF cases are in CMG’s that would undergo less than 5% change (increase or decrease) in the CMG relative weight value as a result of the changes. It is estimated that the CMG 0806 (which is replacement of lower extremity joint with a motor score < 22.05 and with no tiers affecting payment) would have the largest projected increase (3.4%) in the CMG relative weight that will affect the most number of IRF discharges. The largest projected decrease (2.1 %) in a CMG relative weight which will affect the largest number of IRF discharges is for CMG 0304 (non- traumatic brain injury with a motor score < 26.5 and with no tiers affecting the payment).

For a patient whose RIC (rehabilitation impairment category) is non traumatic brain injury and who has a CMG of A0304 (no comorbid condition affecting payment), the reimbursement for the case in FY 2019 will be $23,565.29. For the same case, the payment in FY 2018 is $23,788.68.

For a patient whose RIC is replacement of lower extremity and who has a CMG of A0806 (no comorbid condition affecting payment), the reimbursement for the case in FY 2019 will be $20,532.51. For the same case, the payment in FY 2018 is $19,662.88.

All changes are effective for discharges on or after October 1st, 2018.


The FY2019 CM/PCS Code changes have begun — are you prepared?
Libman Education’s FY 2019 Coding Updates courses contain detailed explanations of critical FY 2019 changes to the ICD-10-CM and ICD-10-PCS codes and guidelines. Learn what the changes mean and how to apply them. Learn more here.


Nirmala Sivakumar, CDIP, CCS
Nirmala Sivakumar is an IRF Coding Educator based in PA. She has created and presented many webinars and workshops on IRF coding and improving clinical documentation. She has trained and mentored many rehab coders. She also has experience in conducting coding audits. She enjoys sharing her expertise and knowledge and has a desire to help coders and PPS Coordinators overcome the challenges of IRF PPS coding.

She has held previous positions as Health Information Management Supervisor for one of HealthSouth’s (Encompass) acute inpatient rehab hospital and as a HIM Coding Consultant at Uniform Data Systems for Medical Rehabilitation. She can be reached at [email protected] or visit

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