CMS Increases 2025 Inpatient Rehab Payment Rates by 3% Adds SDOH Data to Quality Reporting

The Centers for Medicare and Medicaid Services (CMS) estimated the 2025 pay bump will increase inpatient rehabilitation facilities (IRFs) payments by $280 million for FY 2025.

IRFs can be freestanding facilities or specialized units within acute care hospitals. They provide an intensive rehabilitation program and patients who are admitted must be able to tolerate three hours of intense rehabilitation services per day. The new payment rule provides a larger rate update than the agency’s proposed 2.8% increase of $255 million over 2024.

The new payment rule also added four new measures to the IRF quality reporting program (QRP) under the social determinants of health (SDOH) category. The policy begins with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026).

1. Living Situation – One Measure
2. Food – Two Measures
3. Utilities – One Measure

Beginning with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026), CMS is also finalizing a modification of the transportation under the SDOH category.

The modification is designed to improve and align data collection in three ways: (1) specify the look-back period for identifying if and when a patient experienced a lack of reliable transportation, (2) simplify the response options for the patient, and (3) require collection at admission only (to decrease provider burden).

In addition, the agency finalized updates to the outlier threshold to maintain outlier payments at 3% of total payments. The increase in IRF payments of $280 million for FY 2025 reflects a $300 million increase from the update to the payment rates and a $20 million decrease due to the update to the outlier threshold, according to CMS. is

Facilities must meet the 60%  rule requirements for payment under Medicare’s IRF prospective payment system. The 60% rule is a criterion that Medicare uses to determine if an IRF is eligible for reimbursement under its prospective payment system. The rule states that at least 60% of an IRF’s patients must have a qualifying condition that requires IRF treatment.

Read more about the final rule from CMS