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 MedPAC Urges IRF Waivers to 'Level Playing Field' in Site-Neutral System

The Medicare Payment Advisory Commission (MedPAC) will urge Congress to waive some staffing and care requirements for inpatient rehabilitation facilities in order to protect the facilities from losing money under a site-neutral payment system, commission Executive Director Mark Miller told a House panel Tuesday.

“We need to set costs to protect the most efficient providers,” Miller told members of the Health subcommittee of the House Energy and Commerce Committee. “We’ve also been concerned that the payment standards have created incentives to seek physical rehabilitation patients and avoid complex patients.”
Site neutrality has emerged as a potential cost-cutter for federal health care systems. Medicare spent $62 billion on post-acute care in 2012 alone. On Tuesday, Rep. Dave McKinley (R-W.Va.), promised to introduce legislation requiring bundled payments for post-acute care.
Groups such as the American Health Care Association (AHCA) have endorsed site neutrality in principle, but have encountered resistance from the American Hospital Association and other interest groups.
In his written testimony, Miller says he and his colleagues have studied payments and outcomes for patients undergoing rehabilitation for strokes, joint replacement, and hip or other orthopedic surgeries in both inpatient and skilled nursing facilities. He promises that MedPAC’s findings will be published next month in a report to Congress.
Although “unadjusted measures showed larger differences between the settings,” Miller’s written testimony says, “risk-adjusted measures generally indicated small or no differences between the settings.”
If inpatient facilities are paid at skilled nursing rates, “their aggregate payments for the three select conditions would decline” under a site-neutral system, Miller’s testimony says. Therefore, MedPAC will urge Congress to waive some federal regulations for inpatient facilities, including requirements that the facilities meet the same care conditions as hospitals, have more nursing resources available, and have rehabilitation doctors supervising care, Miller says.
Tuesday’s hearing also saw the controversy over observation stays crop up when Rep. Jan Shakowski (R-Ill.) asked Miller to explain what she called “a huge issue for my constituents.”
Miller said that he was “not as deep on this” as he was on other issues, but he said that some budget officials are worried that simply removing the three-day observation stay requirement—as AHCA and others have urged—would allow skilled nursing centers to build up a patient base directly from the communities, without the intervening support and recommendation of hospital officials. He said he and his colleagues “are not far enough along to have a conversation” about how to fix the problem.
“We’re working with a lot of data, we’re talking to hospitals, but there are a lot of messy issues involved in this,” he said.
Shakowski said she hoped Miller and his colleagues would act soon. Countless older folks are suffering sticker shock when they learn that their stays in hospitals don’t actually count as a hospitalization under Medicare’s three-day stay rules, the congresswoman said.
“I think it’s really important,” she said. “I can’t tell you how many elderly individuals and couples have been astonished by this. It just doesn’t make sense.”
(Bill Myers is Provider’s senior editor. Email him at Follow him on Twitter, @ProviderMyers.)
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