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Continuing Thoughts about Site-Neutral (Parity) Expectations

Written by: Mediware on Monday, March 2, 2015 Posted in: Other

Considerations for Site-Neutral Rehab Payment

“Site-neutral” may have been replaced with “efficient care in the most appropriate setting” language in the President’s FY2016 budget, but it was prominently discussed in Washington this past week as the American Medical Rehabilitation Providers Association (AMRPA) hosted its annual Spring Executive Forum. Presentations, followed by visits to the Hill to meet with Congressional leaders, drove focus upon how the care and result of managing impairment and functional restoration differed in settings where rehabilitation services are provided.

The problem created by Medicare’s differing methods of payment for services in diverse settings is costing taxpayers billions of dollars annually and we can no longer support that difference. The solution – neutralize payments across sites of service. Pay the same fee for the same service regardless of where or how it is performed. This policy reform has the bipartisan support of lawmakers, the Medicare Payment Advisory Commission (MedPAC) and a broad group of health care stakeholders including providers, insurers and consumers.

MedPAC has provided Congress with alternative options for creating site-neutral payments to reduce differences in payments between inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs) for certain conditions. It has also provided possible approaches to synchronizing policies across broad payment models such as fee-for-service Medicare and Medicare Advantage. IRFs are geared up to fight the proposals, while SNFs that compete for patients with currently higher-paid rehabilitation facilities, are more supportive.

And while it seemingly makes good sense, the question remains: are these services the same? We are beginning to realize how dissimilar rehabilitation is depending upon where it is delivered. And while evidence is sparse to adequately demonstrate the cost-effectiveness difference, policy makers are rushing to the assumption that all rehab is equal for those receiving it and, therefore, the equal pay for equal work rule should apply to rehabilitation service delivery. The rationale is that the daily cost of care in the nursing home is lower than the IRF, and that the care is the same. But this is not true. Inpatient rehabilitation facilities (IRFs) provide more intensive, coordinated treatment, better results and fewer risks of adverse outcomes .

The problem with Site-Neutral Rehab Payment is the expectation that results will be equal if payment is equal. As suggested by others, providers will do what they are paid to do, but pay for value requires some definition of outcome or what is to be accomplished. By failing to establish and measure the desired outcome, site-neutral payment is just another version of capping fee- for- service payments. To date, insufficient research has been done on the impact of direct payments to hospitals and long-term care facilities to draw any conclusions. Expecting IRFs and SNFs to produce the same rehab outcome for a patient without first defining what that outcome should be, but paying each the same regardless, is a major step backward in achieving the nation’s Triple Aim for healthcare improvement.

Site-neutral payments would result in patients who need intensive inpatient rehabilitation being diverted inappropriately to less intensive settings based solely on their diagnosis, despite their clinical needs. This is clearly a mistake, and could endanger vulnerable beneficiaries.

Despite the fact that CMS refers to IRFs and SNFs as “facilities”, rehabilitation hospitals and nursing homes are not the same and should not be treated as such by MedPAC, Congress or the Medicare program. The Center for Medicare Advocacy argues, “Rehabilitation hospitals must meet stringent criteria to be licensed as a hospital and follow specific regulations that govern the required intensity, multi-disciplinary therapies, and coordination of rehabilitation services. Physicians must manage IRF care, and must be available 24-hours per day”.

Nursing homes have few regulations or standards for how or what rehabilitation is provided. Physicians and coordinated multi-disciplinary care are not available daily, 24-hours per day.

MedPAC acknowledges these differences stating that rehabilitation hospitals have more extensive requirements regarding the amount of therapy and physician supervision of their patients. It is suggesting some adjustment in payment could be made to accommodate this difference and discounting any value or outcome this difference makes, but hinting these requirements could be eased or eliminated.

Rehabilitation is the coordinated process of programmatic delivery, not the sum of procedures. Assuming otherwise without adequate study of these differences will be more costly than current Medicare IRF spend when attempting to achieve parity among providers by rate setting alone.


[ii] Dobson DaVanzo & Associates, LLC. 2014.


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