CMS Pub. 100-22, ch. 3, § 50

(IRFs) That Do Not Submit Required Quality Data

(Rev. 12901; Issued:10-24-24; Effective:06-07-24; Implementation:11-26-24)

Section 3004 of the Affordable Care Act directs the Secretary to establish quality reporting requirements

for IRFs. Beginning with fiscal year 2014, and each subsequent year, if an IRF does not submit required

quality data, their payment rates for the year are reduced by two (2) percentage points for that fiscal year.

Penalties for Failure to Report

For fiscal year 2014, and each subsequent year, if an IRF does not submit required quality data, their payment

rates for the year are reduced by 2 percentage points for that fiscal year. Application of the 2% reduction may

result in an update that is less than 0.0 for a fiscal year and in payment rates for a fiscal year being less than such

payment rates for the preceding fiscal year. In addition, reporting-based reductions to the market basket increase

factor will not be cumulative; they will only apply for the FY involved.

Every year, in late spring/summer, CMS will provide Medicare contractors with a Technical Direction Letter

(TDL) identifying IRFs not meeting the quality data reporting requirements. The contractor shall notify the IRFs

that they have been identified as not complying with the requirements of submitting quality data and are

scheduled to have Medicare payments to their facility reduced by 2 percentage points. Medicare contractors shall

include the model language at the end of this section in their initial notification letter to the IRFs. The notification

letter shall inform the IRF whether they were identified as not complying with the IRF quality reporting

requirements. The notification letter shall also inform the IRF regarding the process to request a reconsideration

of their payment reduction if they disagree with the determination. The reconsideration process shall be outlined

within the initial notification letter. Contractors shall send the notification letters no later than 10 business days

from the receipt of the TDL.

Immediately after the notification letters are issued, Medicare contractors shall submit to the CMS contacts noted

in the TDL a list of facilities who received a letter. There is a 30-day period from the date of the notification

letter to submit a letter requesting reconsideration and documentation to support a finding of compliance.

CMS will then review all reconsideration requests received and provide a determination to the Medicare

contractor typically within a period of 2 to 3 months. In its review of the IRF documentation, CMS will

determine whether evidence to support a finding of compliance has been provided by the IRF. The determination

will be made based solely on the documentation provided. If clear evidence to support a finding of compliance is

not present, the 2% reduction will be upheld. If clear evidence of compliance is present, the reduction will be

reversed.

After the reconsideration process has occurred and prior to October 1 of each FY, CMS will provide the

Medicare contractors with a final list of IRFs that failed to comply with the data submission requirements. The

Medicare contractors will then be responsible for notifying each IRF that failed to comply with the quality data

submission requirements that it will receive a two (2) percentage point reduction in the annual increase factor.

The Medicare contractors will also update the IRF provider file based on the appropriate scenarios listed below.

Medicare contractors shall include the model language at the end of this section in the dispute notification letters

to the IRFs. Contractors shall send this second letter only to IRFs that requested reconsideration. Additionally,

the Medicare contractors shall include information regarding the IRFs right to further appeal the 2 percentage

point reduction via the Provider Reimbursement Review Board (PRRB) appeals process. Contractors shall send

these second notification letters no later than 10 business days from the receipt of the TDL.

If the IRF does not dispute their reduction, the Medicare contractor shall update their provider file for the IRF.

The contractor shall set an indicator in the provider file that triggers Medicare systems to calculate the 2

percentage point reduction on all claims for the upcoming fiscal year. If CMS determination upholds the 2

percentage point reduction, the contractor shall update their provider file in this fashion also.

If the CMS determination reverses the 2 percentage point reduction, the contractor shall not update their provider

file for the IRF and shall notify the IRF that they will receive their full IRF PPS payment update for the

upcoming year.

Model language for initial notification letters:

“This letter is to officially notify you that (Facility Name, CMS Certification Number 000000) is subject

to a reduction in payment for not meeting the Affordable Care Act (ACA) of 2010 requirement for IRFs to

submit quality data. Therefore, Medicare payments to your facility will be reduced by two (2) percentage

points for [insert upcoming year]; unless you can provide evidence that this determination is in error. CMS

updates the requirements and the quality reporting measures required for the IRF Quality Reporting

Program (QRP) annually through rulemaking.

CMS has determined that this IRF is subject to a 2% reduction in the FY (insert upcoming year) annual

increase factor for failure to meet quality reporting requirements pursuant to the Affordable Care Act

Section 3004 because of the following reason(s):

• The IRF failed to submit the required data to the Centers for Disease Control and Prevention (CDC)

National Healthcare Safety Network (NHSN); and/or

• The IRF failed to submit the required quality measures data that are to be submitted to the CMS

designated data submission system.

If you believe you have been in compliance with the quality data reporting requirement and have been

identified for this payment reduction in error, you must submit an email requesting reconsideration and

provide documentation demonstrating your compliance. You have the right to request a reconsideration of

this decision. If you choose to request a reconsideration of this decision, you must submit the request no

later than 30 days following the receipt of this letter.

The request must include the following information:

• The IRF CMS Certification Number (CCN);

• The IRF business name;

• The IRF business address;

• The CEO or CEO-designated representative contact information including name, email address,

telephone number, and physical mailing address;

• The CMS identified reason(s) for non-compliance from the non-compliance notification letter;

• Information supporting the IRF belief that non-compliance is in error, or evidence of the impact

of extraordinary circumstances which prevented timely submission of data.

The request for reconsideration must be accompanied by supporting documentation demonstrating

compliance. CMS will be unable to review any request that fails to provide the necessary documentation

along with the request for reconsideration. Supporting documentation may include any or all of the

following:

• Email communication;

• Data submission reports from the CMS designated data submission system;

• Data submission reports from the National Healthcare Safety Network (NHSN);

• Proof of previous waiver approval;

• Notification of the CCN activation letter to prove that the CCN was not activated by the end of

the reporting quarter;

• Other documentation that may support the rationale for seeking reconsideration.

Please ensure that NO protected health information (PHI) is included in the documentation being

submitted for review.

Documentation that does not support a finding of compliance is as follows:

• Evidence or admission of error on the part of IRF staff, even if the involved staff member are no

longer employed by the IRF and/or a corrective action plan has been or will be put in place after

the end of the reporting year;

• Evidence or assertion that failure to comply was the fault of a vendor or contractor that was

hired by the IRF to perform reporting functions; and,

• Evidence of delays establishing electronic data interchange connectivity between the IRF and

the Medicare claims processing contractor for the purpose of billing, since IRF quality reporting

data is not dependent on billing.

Your letter and documentation must be submitted via email to CMS for reconsideration, using the

following email address: IRFQRPReconsiderations@cms.hhs.gov.

In its review of the IRF documentation, CMS will determine whether evidence to support a finding of

noncompliance has been provided by the IRF. The determination will be made based solely on the

documentation provided. CMS will not contact the IRF to request additional information or to clarify

incomplete or inconclusive information. For further questions related to the reconsideration process, please

refer to the following CMS IRF website: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/IRF-Quality-Reporting/IRF-Quality-Reporting-Reconsideration-and-Exception-

and-Extension.html

An IRF must submit a request for reconsideration and receive a decision on that request before they can

file an appeal with the Provider Reimbursement Review Board (PRRB).”

The Medicare contractor shall update (or not update) the IRF provider file based on the appropriate

scenario listed below:

Upheld

• If the IRF was notified that it was potentially subject to the 2% reduction, and did not request

reconsideration, then the Medicare contractor shall set a quality reporting indicator in the provider file that

triggers Medicare systems to calculate the 2% reduction on all of the IRF’s claims for the upcoming fiscal

year.

• If the IRF was notified that it was potentially subject to the 2% reduction, and requested a reconsideration,

but on reconsideration CMS upheld the decision to apply the 2% reduction, then the Medicare contractor

shall set a quality reporting indicator in the provider file that triggers Medicare systems to calculate the 2%

reduction on all of the IRF’s claims for the upcoming fiscal year.

Reversed

• If the IRF was notified that it was potentially subject to the 2% reduction, and requested a reconsideration, and

on reconsideration CMS determined that the IRF should not be subject to the 2% reduction (i.e., reversed its

decision), then the Medicare contractor shall not update the quality reporting indicator in the IRF’s provider

specific file and shall notify the IRF that they will receive their full IRF PPS payment update for the upcoming

fiscal year.

• If the IRF submitted the necessary IRF Quality Reporting data and was never notified that it might potentially

be subject to the 2% reduction, then the Medicare contractor shall ensure that the indicator value does not apply

the reduction.

Model language for dispute notification letters (IRF provider notification instructions contained in

second TDL):

Upheld:

“Thank you for requesting a reconsideration of the determination made by the Centers for Medicare &

Medicaid Services (CMS) regarding reduction to this IRF’s annual update for failure to meet the

requirements of the IRF Quality Reporting Program (QRP).

CMS reviewed the reconsideration request of this IRF and is upholding the decision to reduce the annual

increase factor for Medicare payments for Fiscal Year (FY) (insert upcoming year). Our records indicate

that this IRF did not provide evidence that it submitted required quality data during the required

timeframes. Therefore, for services provided by this IRF between October 1, (insert upcoming year) and

September 30, (insert upcoming year), the annual increase factor for Medicare payments for FY (insert

upcoming year) will be reduced by two (2) percentage points.

If your facility wishes to further appeal this determination, the appeals process set forth in 42 CFR Part 405,

Subpart R (a Provider Reimbursement Review Board (PRRB) appeal) applies. Details are available on the

CMS.gov PRRB Review Instructions website.

CMS appreciates the opportunity to respond to the reconsideration request for the IRF QRP. For

additional concerns related to the reconsideration process, questions may be submitted to the following

CMS email address: IRFQRPReconsiderations@cms.hhs.gov.”

Reversed:

“Thank you for requesting a reconsideration of the determination made by the Centers for Medicare &

Medicaid Services (CMS) regarding reduction to this IRF’s annual increase factor for failure to meet the

requirements of the IRF Quality Reporting Program (QRP).

CMS reviewed the reconsideration request and determined that this IRF satisfactorily met the quality data

requirements for the FY (insert upcoming year) payment determination. Therefore, the two (2) percentage

point reduction to the FY (insert upcoming year) annual increase factor for failure to comply with quality

reporting requirements will not be applied.

CMS appreciates the opportunity to respond to this reconsideration request for the IRF QRP. For additional

concerns related to the reconsideration process, questions may be submitted to the following CMS email

address: IRFQRPReconsiderations@cms.hhs.gov.”