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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.

Conclusion

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.

December 12, 2019 – T. Edelman

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[1] Paula Spann, (The New Old Age), “A Change in Medicare Has Therapists Alarmed,” The New York Times (Nov. 29, 2019), https://www.nytimes.com/2019/11/29/health/new-old-age-medicare-physical-therapy.html?searchResultPosition=1.
[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), https://jamanetwork.com/journals/jamanetworkopen/currentissue.
[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). http://newsroom.heart.org/news/in-patient-rehab-recommended-over-nursing-homes-for-stroke-rehab?preview=dafdSee CMA, “Value of Inpatient Rehabilitation Hospital Care Reaffirmed” CMA Alert, May 18, 2016), https://www.medicareadvocacy.org/value-of-inpatient-rehabilitation-hospital-care-reaffirmed/.
[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), https://jamanetwork.com/journals/jamanetworkopen/currentissue.
[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), https://skillednursingnews.com/2019/10/therapy-strategies-begin-to-shift-post-pdpm-as-genesis-lays-off-5-of-rehab-staff/.
[9] Id.

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