Inpatient Rehabilitation Facility (IRF) PPS
The IRF PPS is Medicare's prospective payment system for inpatient rehabilitation facilities, paying a single bundled amount per stay based on a patient classification and case characteristics.
Updated
The Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) is the Medicare payment system for freestanding and hospital-based inpatient rehabilitation facilities. It pays a single, bundled federal amount per stay, derived from a patient assessment that classifies the case into a payment group (a Case-Mix Group, or CMG) along with adjustments for the facility's location, wage index, and certain case characteristics such as comorbidities and length of stay.
Like other Medicare inpatient prospective payment systems, the IRF PPS pays a predetermined amount for the stay rather than paying each service line. Accurate patient assessment coding — which drives the CMG assignment and therefore the payment — is what ties clinical documentation to the reimbursement the facility receives.
In practice
Because the IRF payment is driven by the assessment that assigns the CMG, documentation and coding of the patient's functional status and comorbidities directly affect payment, and IRF coding is a common area of audit. The classification and payment rates are updated through annual Medicare rulemaking, so the group logic and rates change over time.
Commonly confused with
- MS-DRG: An MS-DRG groups an acute inpatient hospital stay; the IRF PPS groups an inpatient rehabilitation stay into its own Case-Mix Groups. Both are inpatient prospective payment groupers but for different facility types.