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Can Site Neutral Payment Discussions be Stopped?

Written by: Mediware on Thursday, January 15, 2015 Posted in: Inpatient Rehab

Regulatory Changes in IRF PPS Payments Have Led IRFs to What They Predicted

When comparisons are discussed, the rationale behind those arguments can be flawed to the extent that the outcomes of the study and/or recommendations need to be further understood. MedPAC created an entire chapter on site-neutral payments published in June 2014.  In this discussion, they failed to recognize how IRFs got to the conditions that now exist. There have been regulation-driven changes imposed on the IRF industry, pushing far greater numbers of patients to a SNF level of care, thereby leaving the more medically complex patient to be managed specifically in IRFs. Many predicted limited beneficiary access and inability to utilize a full spectrum of payable IRF PPS CMGs have already taken place, but the warnings were not heeded.


Because real patient care and costs are built on Federal PPS standards, these two levels of care operate under ‘what ifs’ on many different levels. I want to discuss some of these levels,  but most importantly, discuss how comparing hindsight data cannot negate the realities that site-neutral care has not occurred retrospectively in regards to resources expended, outcomes and real costs.

MedPAC was cited as saying, “Our analysis shows that the Medicare program could achieve considerable savings if IRFs were paid under current SNF policy for two conditions.” Those conditions referred to were joint replacement and hip and femur procedures. A discussion exists for how MedPAC compared similar patients, using the acute care MS-DRG for comparable patient types, compares to a retrospective analysis of skilled to an IRF. Rules for RIC, Impairment group category, and tiers can immediately negate a listed admission etiology in acute care. Using risk adjusted MSDRG’s when the IRFPAI coded etiologic diagnosis for the stay and real charges may not crosswalk at all to the acute stay, is certain to be some cause for the disconnect and SNF comparison.


IRF reimbursement is a ‘burden of care’ driven payment model – IRFs were paid based on the coding and functional assessment of the patient. Real IRF coders know how tricky the crosswalk can be from an acute care diagnosis. It may or may not translate. In the MedPAC study, utilization of the admitting MSDRGs may not have led to the correct patient types that were actually being treated and paid for in actuality.   Since many patient types that have been shifted to a SNF, actual payments delivered out of the present PPS payment tools are heavily weighted toward higher case mix group payments, making the average IRF payment rise steadily since 2007 when real shifts in patients started to occur. Regulations have shifted patients with the most needs to IRFs, while the SNF industry continues to grow with medically complex patients that may, in fact, be more functional, but still require medical and nursing oversight in addition to therapy.


If rehabilitation hospitals felt they could admit multi-service patients from the lower CMG (Case Mix Group) categories more often, without fear of retrospective denial, it’s guaranteed that the average per stay costs would NOT be higher in IRFs over SNF’s for similar type patients. There is an entire spectrum of patients in low level CMGs that are never seen in a rehabilitation level of care, despite acuity CMIs that would pay IRFs lesser rates if those types of patients could access IRF care.

IRFs ALREADY have a payment tool that can guide lower paid possibilities depending on patient acuity. They rarely use these for fear of reprisal, even though they are possibly in the IRF PPS payment system. Instead of proposing site-neutral payment, propose to allow IRFs to utilize the full spectrum of CMGs in the IRF PPS payment tool, without reprisal. This can even be done while still allowing the present admission criteria and 60% rule to be enforced. Could this be the reason for the high number of patients that return to acute care during a SNF stay and within 30 days–post discharge? Could those costs of care been remedied with greater medical vigilance in both physician and RN oversight at an IRF level of care?  The 2014 Dobson DaVanzo studysuggests it can.

Further discussion and rationale will be shared in a series of blogs on this topic over the next week. Stay tuned and educate your congressional leaders that site-neutral payment is NOT the immediate answer.

Read part 2

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