The June 2014 MedPAC report to Congress included information on the commission’s review and recommendations for site-neutral payment when rehabilitation of certain conditions occurs in different post-acute-care facilities. The report specifically addressed cases that were treated in inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs). The commission has taken the position that Medicare should not pay more for care in one setting than in another if the care can be provided safely and effectively in a lower-cost setting. The belief is that because there is some overlap in the patients being treated in these two settings, there is an opportunity to develop policy that would more closely align payment for those specific patient categories.

Important Differences Between IRFs and SNFs

IRFs historically have been required to meet hospital-level conditions of participation for Medicare as well as IRF-specific criteria. Thus, IRFs provide higher levels of nursing service – including the use of nursing staff that have specialized training in rehabilitation – and provide intensive therapy with a minimum of three hours of therapy given five times per week. Furthermore, they are to provide care that is supervised by a rehabilitation physician and to meet very specific requirements about preadmission and post-admission assessment (among other very detailed requirements). Additionally, the length of stay necessary to achieve desired outcomes is typically shorter in IRFs than at other similar facilities.

In the report, the commission acknowledged the differences between the two settings but questioned whether Medicare should pay for the differences if the patient types admitted and the reported outcomes were similar.

Conditions Studied

Three conditions that are commonly treated in both IRFs and SNFs were evaluated: stroke, major joint replacement, and other hip and femur procedures (including hip fractures). The report indicates that patient characteristics were not significantly different in the orthopedic areas, but greater differences existed in the stroke population. 

Four outcome measures were used to compare outcomes based on site of services: hospital readmission rates, change in function, mortality rates, and costs accrued in the30 days after discharge from the IRF or SNF. Outcomes data was reported both with and without risk adjustment in each of these areas and reported as follows:

  • Readmission Rates:
    No statistically significant differences were noted when the data was risk-adjusted; IRFs had lower unadjusted readmission rates than SNFs for all three conditions.
  • Function:
    Overall risk-adjusted mobility was similar between the settings but IRFs had greater improvement in self-care.
  • Mortality Rates: 
    During the 30 days after discharge, unadjusted mortality rates were higher for patients who went to SNFs.
  • 30-Day Spending:
    Such spending was higher for IRF patients than for SNF patients, primarily due to the use of other post-acute services (including SNF and home health care).

Payment Comparisons The study compared the base payments for the three conditions across the two settings. The comparisons used base payments for IRFs from 2011 compared to 2014 rates for SNFs, plus the previously recommended SNF PPS from 2008. It is not surprising that if IRFs were paid under either of these SNF payment policies, their aggregate payments for this group of conditions would decline. 

Regulatory Waivers

The commission noted that if payments for select conditions were the same for IRFs and SNFs, the Centers for Medicare & Medicaid Services (CMS) would need to consider waiving certain regulations for IRFs when assessing site-neutral cases in order to create a more level playing field between the settings. The commission specifically mentioned waiving requirements for intensive therapy and rehab physician supervision in these cases.

The Commission’s Conclusions

The commission felt that this study confirmed that at least in the orthopedic cases, there exists a strong starting point at which to address policy for site-neutral payments. The commission further concluded that due to variability of patients receiving rehabilitation for strokes, additional work would need to be done to identify specific cases that could be included under a site-neutral model.

Points to Ponder

  • Site-neutral payment has been discussed for some time, and it is likely that MedPAC will continue to move toward some methodology for identifying patients who could be treated under this model. 
  • Interestingly, stroke and hip fractures are conditions that are included in the CMS-13 diagnostic categories that are included in the conditions of participation for IRFs. No discussion has been noted regarding whether patients being treated under site-neutral policies still would be counted in the overall compliance rates for IRFs.
  • Both IRFs and SNFs should closely monitor activity in this area to determine overall impacts on processes and payment.

About the Author

Angela M. Phillips, PT, is president and chief executive officer of Images & Associates. A graduate of the University of Pennsylvania’s School of Allied Health Professions, she has more than 35 years of experience as a consultant, healthcare executive, hospital administrator, educator, and clinician. Ms. Phillips is one of the nation’s leading consultants assisting inpatient rehabilitation facilities in operating effectively under the Medicare Prospective Payment System (PPS) and in addressing key issues related to compliance.

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