skip to Main Content

MedPAC March 2015 Report Clings to Recommended Site Neutral Payment

Written by: Mediware on Tuesday, March 17, 2015 Posted in: Inpatient Rehab

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105–33) to advise the U.S. Congress on issues affecting the Medicare program.

In his introduction letter to the Senate and House as the report was shared and published, Glenn M. Hackbarth, J.D., stated, “In addition, we recommend site-neutral payments for certain select conditions between two post-acute care sectors: skilled nursing facilities and inpatient rehabilitation facilities. This recommendation builds on our past recommendations for site-neutral payments between hospital outpatient departments and physicians’ offices for certain services, and for consistent payment between acute care hospitals and long-term care hospitals for certain classes of patients.  Medicare (1) often pays different amounts for similar  services across sectors. Site-neutral payments that base the payment rate (2) on the less costly sector can save money for Medicare, reduce cost sharing for beneficiaries, and (3) reduce the incentive to provide services in the higher paid sector , (4) without compromising beneficiary access to care or health outcomes.”  In fact, chapter 7 of the March Report is devoted to discussing rationale to support the site-neutral payment concept.


Let’s look at these 4 MedPAC beliefs set out above and discuss why you must inform your congressional leaders that the IMPACT ACT of 2014 is the first step in comparing REAL information, at the patient level, that enables apples-to-apples review and recommendations. Immediately, we know that by the level of care and capacity, patients in rehabilitation hospitals/units have significantly more RN vigilance and health care education RN time, along with greater rehabilitation concentrated physician oversight, keeping risks and potential for adverse issues mitigated. An entire admission assessment seems nullified through this recommendation when the rehabilitation physician attests to the medical necessity of care provided based on training and experience before Medicare beneficiaries can access their benefit to hospital-level rehabilitation care. Now, costs over patient guided need, can take recommended precedence if site-neutral payment is considered.

Who believes ‘less costly’, without compromising beneficiary access to care or health outcomes , is totally accurate?  More studies need to be completed; and data that can provide a true cross-comparison are on the horizon as the IMPACT ACT of 2014 aligns more data points for comparison.

According to the Dobson DaVanzo Study discussed by AMRPA at their conference last year, the following data was generated from a two year comparison study of Medicare beneficiaries receiving Inpatient Rehabilitation Hospital-level care versus Skilled Level of care.

  • IRF patients left earlier and stayed home longer than SNF patients
  • IRF patients had an 8% reduction in mortality rates during the 2 year study period than SNF patients
  • IRF patients had 5% fewer ER visits and significantly fewer hospital readmissions per year than SNF patients
  • Patients had better clinical outcomes and remained in their homes longer for about a $12.49 per day difference in the cost of a hospital/unit rehabilitation care.

Clearly, all of these outcomes far outweigh the $12.49 difference – think about your loved ones and apply that price to these facts. The fact that there was a disparity in costs was also driven year after year by Medicare beneficiaries’ inability to access care when their assessments fell into some of the lesser costing but still deserving, case mix groups; thereby diverting those patient types away from Inpatient Rehabilitation Hospitals/Units. WHAT IF the patients in the two year study included more patients that would have benefitted from a very short stay, lower cost IRH/U care CMG category?  Patients increasingly cannot access their benefit to a rehabilitation hospital/unit despite having  a payment classification that meets their lower intensity, but still medically complex, needs.

WHAT DO WE NEED YOU TO DO RIGHT NOW?  Make certain your legislators are aware that with the passing of the IMPACT ACT of 2014, we are expressing our concerns over Congress establishing the recommended ‘site-neutral’ payments for select conditions treated in inpatient rehabilitation hospitals and units and skilled nursing facilities BEFORE the LAW HAS BEEN FULLY IMPLEMENTED.  Due diligence to enable information from that law to guide decisions is hastily being averted with MedPAC recommendations.

CALL the  Congressional SWITCHBOARD at 202-224-311;  ask to be connected to YOUR house members
office. Ask your member to sign onto the Martha Roby and Bill Pascrell, Jr., letter to ‘Support Using IMPACT Data to Inform PAC Payment Reform’. THERE is NO TIME TO WASTE! Before the end of March, the Sustainable Growth Rate formula will require a voted solution and any attempt at ‘saving dollars’ can be pushed into legislation.  Make sure site-neutral IRH/U & SNF care isn’t one of those unfounded cuts!

Tell your area representative to sign onto this letter to please contact;  if Republican,, and if Democrat,  Request they sign on NOW – March 24th is the deadline to sign onto the letter!

Back to top