On April 29, 2011, CMS published a proposed rule to update Medicare IRF PPS rates and policies for FY 2012. The proposal would increase IRF PPS rates by 1.5% ($120 million nationwide), reflecting a 2.8% market basket increase (using a revised and rebased index) that is partially offset by a 1.3 percentage point rate reduction mandated by the ACA.  In addition, the rule would implement a new quality reporting program, also required by the ACA, that reduces the annual IRF PPS increase factor by 2 percentage points for facilities that fail to report quality data, beginning in 2014. Under the proposal, IRFs initially would submit data on two quality measures: “urinary catheter-associated urinary tract infection” and “pressure ulcers that are new or have worsened.” CMS is considering for future rulemaking a third measure under development that would address readmissions within 30 days to another inpatient stay (acute care hospital, rehabilitation facility, or other setting). The proposed rule also would, among other things: update case-mix group relative weights; increase the high cost outlier threshold from $11,410 to $11,822 (which would maintain outlier payments at 3% of total IRF PPS payments in FY 2012 compared to 2.7% in 2011); use final FY 2011 IPPS pre-reclassified and pre-floor wage data; update the rural, low-income patient, and teaching status adjustment factors using more recent data; allow IRFs to receive temporary adjustments to their full-time equivalent intern and resident caps if interns/residents are unable to complete their training in certain situations; and revise rules regarding “new” facilities and changes in bed size and square footage for IRFs and inpatient rehabilitation units. Comments on the proposed rule are due by June 21, 2011.