Section 115 of the Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Extension Act of 2007 amended Section 2005 of the Deficit Reduction Act of 2005 to revise the following elements of the 75 percent rule that are used to classify IRFs:

• The compliance percentage that IRFs must meet to be excluded from the acute care inpatient hospital prospective payment system (PPS) and to be paid under the IRF PPS will be set permanently at 60 percent for cost reporting periods beginning on or after July 1, 2005. 
  
• This statutory change effectively eliminates the increase to 65 percent that had already taken effect for cost reporting periods beginning on or after July 1, 2007, and also eliminates the increase to 75 percent that was scheduled to take effect for cost reporting periods beginning on or after July 1, 2008.  All IRF cost reporting periods (or portions of cost reporting periods) beginning on or after July 1, 2005, will be evaluated using the 60 percent threshold.  
  
• Patient comorbidities that satisfy the criteria specified in 42 Code of Federal Regulations (CFR) §412.23(b)(2)(i) will be permanently included in the calculations used to determine whether an IRF meets the 60 percent compliance percentage.

To minimize the level of effort required from Medicare contractors and IRFs, contractors may now combine the two portions of cost reporting periods that are both reviewed at the 60 percent level into one continuous 12-month review period. 

For example, an IRF's compliance review period for the cost reporting period beginning May 1, 2008, was divided into two periods: one from January 1, 2007, through April 30, 2007, and a separate review period from May 1, 2007, through December 31, 2007.  Since both of these review periods will now be evaluated at the 60 percent compliance threshold, contractors may now instead draw one combined random sample of the IRF's cases from the 12-month period as a whole (from January 1, 2007, through December 31, 2007) to determine the facility's compliance with the 60 percent threshold.