MedPAC Report Discusses Implications for IRFs and SNFs Under the 75% Rule

In Brief: A chapter in the June 2007 Medicare Payment Advisory Commission’s (MedPAC) Report to Congress contains substantial discussion on issues relative to skilled nursing facilities (SNF) and the measures used to assess the quality of care provided in them. Any discussion on prospective payment system (PPS) in SNFs and quality of care are of interest to physiatrists because of the 75% Rule and local coverage determinations’ (LCDs) rules which often pit inpatient rehabilitation facility (IRF) care against SNF rehabilitation care and the specialty has physicians who practice in both IRFs and SNFs.

A MedPAC report to Congress, Promoting Greater Efficiency in Medicare, criticizes the current SNF PPS on two grounds stating it “results in impaired access for certain beneficiaries who require expensive nontherapy ancillary services (drugs, IV medications, and respiratory therapy) and encourages providers to furnish therapy even when it is of little or no value.”

The report summarizes research on possible new payment methods to correct both problems under payment of the nontherapy ancillaries and over-utilization of therapy services due to financial incentives. It does not yet recommend new methods but they are clearly coming. One option would classify patients by patient characteristics rather than by the current system that uses case mix with the resource utilization group (RUG) classification system.

The report states that between 2000 and 2004 quality of care worsened in SNFs using a number of indicators and correcting for case mix. Hospital-based SNFs had a better rating than free standing facilities, but their closure rate is substantial and their indicators were negative.

Implications for the 75% Rule
The report appears to provide cogent arguments for Congress on the faulty logic of those at CMS who believe that more and more IRF cases should be sent to SNFs. AAPM&R continues to have concerns that patients are being turned away from quality inpatient rehabilitation care to settings less-suited to treat intense rehabilitation needs because of the 75% Rule. Given the tight budget situation and likely cuts for most providers this year, the references in the MedPAC report chapter to unnecessary and over-paid rehabilitation services in SNFs may cause some SNF cuts focused in the rehabilitation area.

MedPAC, an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33), advises Congress on issues affecting the Medicare program and is generally viewed with favor by Congress. MedPAC’s independence and professionalism are well-respected.