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  1. Patients Need Therapy – Medicare Payment Systems Create Barriers
  2. Caution: Hospital “Outpatient” Rule Negates Statutory Inpatient Coverage for In-Hospital Dental Care
  3. Fairness in Nursing Home Arbitration Act Provides Important Protections
  4. Center for Medicare Advocacy Submits Statement to Ways & Means Hearing on “Caring for Aging Americans”

Patients Need Therapy – Medicare Payment Systems Create Barriers

A unified Medicare payment system that pays all institutional post-acute care providers the same rates, regardless of setting, runs counter to repeated analysis showing that all post-acute providers are not the same, even when they treat patients with similar conditions. It also ignores the significant changes that Medicare made in its new reimbursement system for skilled nursing facilities (SNFs), effective October 1, 2019, which have already resulted in the reduction of therapy services.[1] (Similar reductions for home health care are anticipated as a result of an imminent new payment system effective January 1, 2020.)

A new study of beneficiaries in traditional Medicare, age 66 and older, who were discharged from an acute care hospital following a stroke between January 1, 2013 and November 30, 2014, finds that the 99,185 patients who were discharged to an inpatient rehabilitation facility (IRF) had better functional outcomes with respect to mobility and self-care than the 66,082 patients who were discharged to a SNF.[2] This analysis is consistent with the same findings identified in more limited prior research[3] and with the joint recommendation of the American Heart Association and American Stroke Association. Issued in 2016, the heart and stroke study concluded that patients who had strokes should go to IRFs for post-hospital care rather than to SNFs, if possible and medically appropriate, because of the likelihood of better health outcomes.[4]

The new study recognizes two long-standing challenges in ensuring that stroke patients get post-hospital care in the appropriate setting – the disparity in the availability of IRFs and SNFs across the country and the current cost differential, with IRFs paid more than SNFs. A new concern identified by the researchers is the unified payment system, which creates “financial incentives to shift high-cost patients, such as patients with stroke and other complex medical conditions, to lower-cost postacute settings.”[5] The researchers recommend that “Effective administrative oversight will be required to ensure patients receive the appropriate care in the right setting.”  Their conclusion focuses specifically on concerns about the IMPACT Act: “Postacute care reform based on the IMPACT Act must avoid a payment system that shifts patients with stroke who could benefit from intensive inpatient rehabilitation to lower cost settings.”[6]

Inappropriately limited therapy in SNFs is another concern for Medicare beneficiaries who need therapy. On October 1, 2019, the new Medicare payment system for SNFs – the Patient-Driven Payment Model (PDPM) – went into effect. PDPM’s financial incentives explicitly reverse the financial incentives of the prior reimbursement system (Resource Utilization Groups) so that Medicare now pays SNFs more if they provide no therapy to residents and less if they provide any therapy.[7]

SNFs responded immediately to the new financial incentives, with one major nursing home chain, Genesis HealthCare, confirming that it had laid off about 6% of its rehabilitation workforce.[8]  Another chain, Signature HealthCARE, confirmed that it had asked its therapists to take “‘a small pay adjustment’ to preserve jobs and maintain care.”[9] As reported by the national therapy associations in early October, thousands of therapists lost their jobs or had their hours reduced, or were told to report for work on an “as needed” basis. Many others were directed to shift their therapy from individual therapy to group or concurrent therapy less costly for facilities, and permitted by PDPM.


Medicare beneficiaries who need therapy, and their advocates, should be troubled by these developments. Financial incentives in payment programs are undermining beneficiaries’ ability to get post-hospital care in the most appropriate postacute setting and are encouraging SNFs to provide limited, if any, therapy to beneficiaries. Reimbursement policy should not be allowed to erode beneficiaries’ statutory rights to eligibility and coverage for necessary health care services. But that is exactly what is happening.


[1] Paula Spann, (The New Old Age), “A Change in Medicare Has Therapists Alarmed,” The New York Times (Nov. 29, 2019),
[2] Ickpyo Hong, et al, “Comparison of Functional Status Improvements Among Patients With Stroke Receiving Postacute Care in Inpatient Rehabilitation vs Skilled Nursing Facilities,” JAMA Network Open. 2019;2(12):e1916646. Doi:10.1001/jamanetworkopen.2019.16646, Vol. 2, No. 12 (Dec. 2019),
[3] Id. See studies cited in footnotes 4, 29, 31, and 32.
[4] AHA/ASA Newsroom, “In-patient rehab recommended over nursing homes for stroke rehab” (News Release, May 4, 2016). CMA, “Value of Inpatient Rehabilitation Hospital Care Reaffirmed” CMA Alert, May 18, 2016),
[5] Ickpyo Hong, et al, “Comparison of Functional Status Improvements Among Patients With Stroke Receiving Postacute Care in Inpatient Rehabilitation vs Skilled Nursing Facilities,” JAMA Network Open. 2019;2(12):e1916646. Doi:10.1001/jamanetworkopen.2019.16646, Vol. 2, No. 12 (Dec. 2019),
[6] Id.
[7] 83 Fed. Reg. 39162, 39257 (Aug. 8, 2018) (“we project that for residents whose most common therapy level is RU (ultra-high therapy) – the highest therapy level, there would be a reduction in associated payments of 8.4% percent, while payments for residents currently classified as non-rehabilitation would increase by 50.5 percent.”)  See also Table 37, PDPM Impact Analysis, Resident-Level, at 83 Fed. Reg. 39162, 39257-39259 (Aug. 8, 2018).
[8] Alex Spanko, “Therapy Strategies Begin to Shift Post-PDPM as Genesis Lays Off 5% of Rehab Staff,” Skilled Nursing News (Oct. 2, 2019),
[9] Id.


Caution: Hospital “Outpatient” Rule Negates Statutory Inpatient Coverage for In-Hospital Dental Care

Medicare generally does not cover dental care (see 42 U.S.C. § 1395y(a)(12)).  Under the law, however, if dental treatment must be performed in a hospital, either because of a patient’s underlying condition or the severity of the dental procedure, Medicare Part A covers the costs of the inpatient hospitalization, even if the procedure itself is not covered. For instance, Medicare payment would be made for the room and board, anesthesia, and x-rays, but not the fees for the dentist and other physicians (e.g., anesthesiologist and radiologist). Unfortunately, although beneficiaries are legally entitled to this coverage, it has been effectively negated by Medicare’s current outpatient “Two-Midnight” rule for hospital stays.

Implemented in 2013, the “Two-Midnight” rule states that hospital stays that are not expected to cross two midnights should be billed to Medicare as “outpatient” under Part B rather than “inpatient” under Part A. Because beneficiaries who must undergo dental treatments in a hospital typically stay there no more than several hours, they are not admitted as “inpatients” under this rule. As a result, their hospitalization costs are no longer billed to and covered by Medicare Part A. Patients and their families may be shocked by the unexpected hospital bill they must foot, on top of the fees for the dental treatment.

Case Study Demonstrates Harm

Recently, an Iowa resident (“Mrs. H”) contacted the Center for Medicare Advocacy regarding this very problem. Her husband (“Mr. H”), age 80, has been non-ambulatory for past two years after successive hospitalizations for major sepsis. Multiple spinal surgeries left him unable to move his neck. He requires a Hoyer lift for bed to wheelchair transfers. For many years, he was prescribed medications (i.e., Actonel, Fosamax, Prolia) to treat severe osteoporosis. A known side effect of these drugs is “osteonecrosis” (bone death) of the jaw, and associated dental problems.

This year, a dentist examined Mr. H in his wheelchair and found that his teeth were severely infected and needed to come out as soon as possible to avoid more sepsis. It was urgent, as Mr. H was already beginning to display agitation and combativeness, likely from the oral infection. Neither that dentist nor any of the oral surgeons’ offices or day surgery clinics in and around the city had a Hoyer lift to move him from his wheelchair to an operating surface. Mr. H also had orthopedic hardware, cardiac stents, a suprapubic catheter, and an oxygen concentrator for his pulmonary disease, which likely also presented a concern for these providers.

In the end, Mr. H had no option but to have his full mouth extractions performed at a hospital. His wife understood that Medicare would not pay for the extractions themselves, but had expected that the hospitalization costs would at least be covered, based on the plain language of the statute. She was not aware that this coverage would not be available to him because of the Two Midnight rule. As the hospital would not admit Mr. H as an “inpatient” and submit a claim to Medicare Part A under this rule, Mr. H would be liable for nearly the entire cost of having his teeth pulled in the hospital. He received a bill for close to $14,000, which he and his wife simply cannot afford.


Fairness in Nursing Home Arbitration Act Provides Important Protections

On December 5, 2019, Representatives Linda Sánchez (D-CA) and Jan Schakowsky (D-IL) introduced the Fairness in Nursing Home Arbitration Act (H.R. 5326). The legislation prohibits long-term care facilities from requiring or requesting residents (or their representatives) to sign pre-dispute arbitration agreements. Pre-dispute arbitration agreements, which require victims to give up their right to settle disputes in court, have come under increased scrutiny in the months following the Trump Administration’s rollback of the 2016 federal ban of such agreements in nursing homes.

In a press release, Rep. Sánchez stated, “[u]nder this bill, families will no longer have to worry about losing their right to a day in court.” Rep. Schakowsky added that “[w]hether it’s willful neglect or a simple accident, residents and their families should have the right to seek justice in front of a judge and jury, and not be locked into a conference room for forced arbitration.”

As noted in the press release, the Center for Medicare Advocacy and twelve other organizations have already endorsed this legislation.


Center for Medicare Advocacy Submits Statement to Ways & Means Hearing on “Caring for Aging Americans”

The House Ways and Means Committee held a hearing on November 14, 2019 entitled “Caring for Aging Americans.” In a Statement submitted for the record, the Center for Medicare Advocacy expressed concerns about the Patient-Driven Payment Model (PDPM), the new Medicare reimbursement system for skilled nursing facilities that went into effect on October 1, 2019.

The financial incentives in PDPM have already led to reduced therapy services for residents and are changing facilities’ admission and assessment practices. The Center cautions against allowing reimbursement policy to erode and undermine longstanding Medicare eligibility and coverage rules.


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