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PAC PPS: A Unified Payment System for All Post-Acute Care

Written by: Shawn Hewitt on Wednesday, April 13, 2016 Posted in: Acute Care Rehab, Inpatient Rehab, medilinks

If you follow what happens at the legislative level, you understand that there has been an ongoing effort to develop a unified payment system for post-acute care. The Medicare Payment Advisory Commission (MedPAC) met again on April 7, 2016, to discuss the recommendations for a unified post-acute care prospective payment system (PAC PPS).

The Approach to a Uniform PAC Payment System

According to the meeting brief, “Section 2(b)(1) of the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 requires the Commission to develop a prototype prospective payment system (PPS) spanning the post-acute care (PAC) settings, using the uniform assessment data gathered previously during CMS’s Post-Acute Care Payment Reform Demonstration (PAC-PRD) (completed in 2011). The Act requires the Commission to submit a report by June 30, 2016, presenting an approach for a unified, cross-setting PAC payment system and, to the extent feasible, consider the impacts of moving to such a system.”

The brief indicates that this will serve as the final public meeting before MedPAC releases a mandated report by the June 30 date. The report will describe an approach for a consistent, cross-cutting PAC payment system as well as considerations of the payment impacts of moving to such a system.

The PAC PPS Plan

In a recent presentation, MedPAC Policy Analyst Carol Carter explained that the objective of implementing a PAC PPS is to change current policies–specifically, that of supporting four uniquely different, setting-specific payment systems as well as different payments for similar patients. Instead, MedPAC is seeking to develop a unified PAC PPS that would extend across the four settings and provide base payments on similar patient characteristics.
MedPAC’s recommended design for a PAC PPS includes:

• A common unit of service
• A common risk-adjustment methodology using patient characteristics
• An adjustment to HHA payments to align them to the costs of institutional stays
• Separate models to establish payments for non-therapy ancillary services (e.g., drugs) and routine and therapy services
• Two outlier payment policies: high-cost and short-stay
• No strong evidence for payment adjustments for rural providers or IRH/Us with teaching status

MedPAC’s staff noted that the IRF PPS teaching adjustment would be unnecessary, should the PAC PPS include a robust risk-adjustment methodology and a high-cost outlier policy to account for the higher costs of treating some patients.

For organizations that offer one or all of the PAC span internally, or for those that have relationships with external partners, it will be critical to understand how the unified PPS system will impact payments and just as important to understand how to continue to deliver true patient-centered care that is setting agnostic.

Mediware is committed to working with our partners to deliver information and tools to assist with ongoing PAC PPS. Learn more at

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