FY 2027 IRF correction revises conversion and outlier amounts
Oct 4, 2026 edition · GC-2026-0145 · Published 2026-10-04 · Version 2 · Effective
CMS’s October 1 IRF correction revises the conversion factor, outlier threshold and related wage-based calculations.
What happened
CMS’s October 1 correction to the FY 2027 inpatient rehabilitation facility rule is effective that day. It changes the standard payment conversion factor from $19,868 to $19,866 and the outlier threshold from $8,857 to $8,856. The corresponding intermediate conversion figure changes from $19,888 to $19,886, and the identified budget-neutrality factor changes from 1.0036 to 1.0035. The notice also replaces related payment, worked-example and impact tables and corrects stated wage-adjustment factors. Those changes must be reconciled as a set rather than applying the two-dollar base change alone.
CMS explains that an IPPS hospital’s wage data had been omitted because it was incorrectly classified as a rural emergency hospital. Restoring it changed the pre-floor, pre-reclassified wage index used in IRF calculations, leading to revised budget neutrality and outlier calculations. The correction also removes erroneous text about public-reporting deadlines from the separate request-for-information discussion. CMS describes this as implementing the previously adopted methodology correctly, not a substantive new payment policy. As of October 4, finance and billing teams should verify the corrected versions and patient-specific case-mix and facility inputs before assessing a claim discrepancy.
Scope and timing
- Authority status
- Effective
- Applicability
- Operationally relevant
- Audience
- Health systems, Provider networks
- Jurisdiction
- Federal
- Affected functions
- Revenue Cycle, Compliance, Clinical Operations
- Responsible owner
- Revenue Cycle
- Recorded date
- 2026-10-01
- Date type
- effective
Why it matters
The correction affects more than the headline conversion factor, so isolated adjustments can leave payment models and claims inconsistent.
Recommended action
Validate the IRF pricer and modeling inputs against the corrected tables and factors, then reconcile representative October claims and outlier calculations.
Implementation playbook
- Validate IRF pricer and contract modeling against the complete corrected tables and sample October claims. Revenue Cycle · Due 2026-10-09
- Record the applicability assessment and validate the affected workflow with its operational owner. This is an internal review target, not an additional statutory deadline. Compliance · Due 2026-10-12
Sources
- Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2027 and Updates to the IRF Quality Reporting Program; CorrectionOfficial · Health and Human Services Department, Centers for Medicare & Medicaid Services · 2026-10-01 · Source review 2026-10-05
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