CMS Releases FY 2027 IRF PPS Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) has released the fiscal year (FY) 2027 inpatient rehabilitation facility prospective payment system (IRF PPS) proposed rule.

The proposed rule includes some technical proposals that would modify the IRF coverage and documentation requirements as well as IRF QRP submission deadlines. The proposed rule does not include any proposals to modify the existing IRF transfer policy. The proposed rule does, however, include several Requests for Information (RFI) that could indicate potential future impactful changes.

On the FY 2027 payment side, the rule would provide an overall 2.8% increase to estimated payments per discharge, compared to the 2.6% payment update that CMS finalized for FY 2026.

FY 2027 Payment Updates

Aggregate Estimated Payment Increase: 2.8% / $355 million (field-wide)
Market Basket Update (with Productivity Adjustment): 2.4%
Labor-Related Share: 74.5%
Standard Payment Conversion Factor: $19,881
Outlier Threshold: $8,689 (from $10,141 in FY 2026)

FY 2027 Coverage, Payment, and Documentation Policy Changes

Initiation of Therapy Requirement
CMS proposes to clarify the requirement that therapy be initiated within 36 hours of midnight of the day of admission to the IRF.

Documenting Function in Preadmission Screen
CMS proposes to expand the elements required in the preadmission screening (PAS) to include “current functional status” as well as prior level of function.

Timing of Interdisciplinary Team Meeting
CMS proposes to tighten the requirement for the timing of the weekly interdisciplinary team meeting by requiring an initial interdisciplinary team meeting to occur “on or before the fourth day from midnight on the date the patient is admitted” and subsequent team meetings to occur “at least once per week after the date of the prior team meeting.”

Request for Information on Future IRF Payment Reform
The rule includes an extensive Request for Information (RFI) on future IRF payment reform, specifically two major areas of reform:

Refining the current IRF patient classification system by creating a draft list of IRF-specific clinical categories; and
Creating a new system of comorbidity scoring to better account for the severity and number of comorbidities for IRF patients.

The RFI does not propose any of these changes be implemented in FY 2027 but requests stakeholder feedback on both areas. CMS also references two new technical reports addressing their PPS changes under consideration; these are available for download as part of the rule’s associated data files here.

FY 2027 Quality Reporting Program Updates

Proposal to Revise Data Submission Deadlines for the IRF QRP
For the FY 2029 IRF QRP, which will be based upon Calendar Year 2027 data, CMS is proposing to reduce this timeline to the “15th day of the second month following the end of calendar quarter.”

The proposed rule will be published in the Federal Register on April 6, 2026. Comments on the proposed rule are due by June 1, 2026.

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ODP Updates the MAAC on Paid Relative Caregiving & Travel Limitations

By Tim Sohosky • May 29, 2026

On Thursday, May 28, the Office of Developmental Programs (ODP) provided an update to the Medical Assistance Advisory Committee (MAAC) regarding current policies and upcoming regulatory changes following a recent Commonwealth Court decision. On February 17, 2026, the PA Commonwealth Court issued a decision in Dunkelberger v. Department of Human Services that determined that ODP’s limitations on provider model services (specifically the 40/60-hour caps and 90-day travel maximums) were null and void. The decision was based on process rather than policy validity; the Court found that these limitations were not properly promulgated as regulations in accordance with the Commonwealth Documents Law and Regulatory Review Act. To maintain a balanced approach between flexibility and oversight, ODP is moving forward with the following actions: Regulatory Amendments: ODP will amend regulations to establish formal authority for setting service delivery limits that support individual welfare and program integrity. Self-Directed Model Agreements: ODP has already modified agreements for self-directed models to clarify limits on overtime, combined relative service provision, and travel restrictions. Travel Restrictions: Due to the inability to monitor services effectively over long distances, service provision will now be limited to Pennsylvania and contiguous states. Waiver Changes: ODP will seek modifications through the amendment process to the Consolidated, P/FDS, Community Living, and Adult Autism Waivers to include: New requirements for agencies providing IHCS and Companion services to disclose a DSP's relationship to participants; and Strengthened programmatic oversight and integrity measures. Life Sharing Alternative: For participants requiring more than 60 hours of paid care from a relative, the Life Sharing (24/7) service model remains the recommended alternative. ODP anticipates a public comment period for these proposed waiver changes beginning in January 2027.

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ODP Provides Updates to PBC 2026/27 Residential Pay-for-Performance

By Cathy Barrick • May 28, 2026

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