Quality and Practice

Quality & Practice

AAPM&R Post-Acute Care (PAC) Toolkit

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Facility Regulations

The following information breaks down the regulations that make define each facility and maintain their standards.

Inpatient Rehabilitation Facility:

  • 42 CFR 412.604[i]

    Each IRF must meet the conditions set out in the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) to receive payment for inpatient hospital services furnished to Medicare Part A fee-for-service beneficiaries. The IRF PPS rule is updated annually.

The conditions under the IRF PPS are:

  • Complete Patient Assessment Instrument
    • Including for Medicare Advantage patients admitted to or discharged from an IRF.
  • Reporting requirement: All inpatient rehabilitation facilities participating in the prospective payment system under this subpart must meet the recordkeeping and cost reporting requirements of §§ 413.20 and 413.24 of this subchapter.

The following does not qualify as inpatient hospital services, but as physician services. Physician services are under the fee schedule, not the Prospective Payment System (PPS).

  • Physicians' services that meet the requirements of § 415.102(a) of this subchapter for payment on a fee schedule basis. Those requirements are:
    • (1) The services are personally furnished for an individual beneficiary by a physician.
    • (2) The services contribute directly to the diagnosis or treatment of an individual beneficiary.
    • (3) The services ordinarily require performance by a physician.
    • (4) In the case of radiology or laboratory services, the additional requirements are met (stated in 42 CFR § 415.120 or § 415.130, respectively).
  • Physician assistant services.
  • Nurse practitioner and clinical nurse specialist services.
  • Certified nurse midwife services.
  • Qualified psychologist services.
  • Services of an anesthetist.

If the facility does not comply, CMS or a Medicare fiscal intermediary, which is a private company contracted by Medicare to pay bills, such as hospital expenses, for Parts A and B,[ii] may:

  • (i) Withhold (in full or in part) or reduce Medicare payment to the inpatient rehabilitation facility until the facility provides adequate assurances of compliance; or
  • (ii) Classify the inpatient rehabilitation facility as an inpatient hospital that is subject to completion of the patient assessment instrument and is paid under the prospective payment systems for inpatient hospitals, specified in § 412.1(a)(1).

View this webinar for more information on IRF documentation and compliance. 

>>> Jump to the next topic for Inpatient Rehabilitation Facilities

Skilled Nursing Facility:

SNFs are reimbursed under Parts A & B[iii]

Part A

A beneficiary must have had a qualifying hospital inpatient stay for at least three midnights. The need for the skilled care must be related to the diagnosis that triggered the acute hospital stay.

SNFs are reimbursed under prospective payment system that pays facilities a daily rate that covers all patient-related expenses, including nursing services, therapy services—calculated in minutes—and a daily room charge. The predetermined rate for each patient is based on the type and quantity of skilled services the patient will need. Depending on this mix of services, the patient is assigned a number based on his/her need for different therapies, that determines the facility’s daily reimbursement for that patient. This is known as the patient driven payment model and will begin in October 1, 2019. This will be a more specific cost analysis of what the patient’s needs for different therapies, nursing, and facility costs. Patients will be analyzed by their condition that brought them into treatment, the ability to have therapy, and then assigned a payment. It is not anticipated that there will be a major impact to physicians. The analysis of the patient is done by different relevant therapists and the facilities. The patient’s payment will change over time as their condition changes.

CMS finalized its revision to the definition of group therapy as proposed without modification. Under the SNF PPS, group therapy will be defined as a qualified rehabilitation therapist or therapy assistant treating 2 to 6 patients at the same time who are performing the same or similar activities. Read more.

Part B

Part B pays for each therapy service provided, using the Current Procedural Terminology (CPT Codes). If the Part B patient is staying in the facility, charges for room, board and other services may be paid by the patient, Medicaid or other insurance.

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Long Term Acute Care Hospital:

LTCHs requires documentation that patients have a complicated course of recovery requiring prolonged hospitalization.[iv] Complex medical issues that meet two or more medically active conditions, which require three or more interventions, including;[v]

  • IV medications,
  • continuous IV fluids (not the same as “keep a vein open” order),
  • parenteral nutrition or peripheral parenteral nutrition,
  • and blood products; and

LTCHs also require active participation in therapies at least 5 days/week.[vi] Complex wounds or burns and mechanical ventilation weaning can also qualify,[vii] but are not the standard conditions required.

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Home Health

Home Health services are covered under Medicare Parts A & B. Covered services will typically include:

  • Part-time or intermittent skilled nursing care
  • Part-time or intermittent home health aide care
  • Physical therapy
  • Occupational therapy
  • Speech-language pathology services
  • Medical social services[viii]

Medicare does not pay for:[ix]

  • 24-hour-a-day care at home,
  • meals delivered to your home,
  • homemaker services, or
  • personal care.

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The below chart from the June 2019 MedPAC Report breaks down federal regulatory requirements for staffing and services, by PAC setting. We have included the portion of the chart related to physician services, but to see the full chart, please click here.[x]

MedPAC June 2019 Chart: Select Federal Regulatory Requirements for Staffing and Services by PAC Setting


[i] 42 CFR § 412.604 – Conditions for payment under the prospective payment system for inpatient rehabilitation facilities. Legal Information Institute. https://www.law.cornell.edu/cfr/text/42/412.604. Accessed May 29, 2019.

[ii] Fiscal intermediary. Medicare Resources. https://www.medicareresources.org/glossary/fiscal-intermediary/. Published June 1, 2014. Accessed May 29, 2019.

[iii] Kander M. How Medicare Reimbursement Works in Skilled Nursing Facilities. ASHAWire. 2014;19(6). https://leader.pubs.asha.org/doi/10.1044/leader.BML.19062014.26. Published June 1, 2014. Accessed May 29, 2014.

[iv] Stefanacci RG. Admission Criteria for Facility-Based Post-Acute Services. Annals of Long-Term Care. 2015; 23(11). https://www.managedhealthcareconnect.com/article/admission-criteria-facility-based-post-acute-services-0. Published November 2015. Accessed May 29, 2019.

[v] Stefanacci RG. Admission Criteria for Facility-Based Post-Acute Services. Annals of Long-Term Care. 2015; 23(11). https://www.managedhealthcareconnect.com/article/admission-criteria-facility-based-post-acute-services-0. Published November 2015. Accessed May 29, 2019.

[vi] Stefanacci RG. Admission Criteria for Facility-Based Post-Acute Services. Annals of Long-Term Care. 2015; 23(11). https://www.managedhealthcareconnect.com/article/admission-criteria-facility-based-post-acute-services-0. Published November 2015. Accessed May 29, 2019.

[vii] Stefanacci RG. Admission Criteria for Facility-Based Post-Acute Services. Annals of Long-Term Care. 2015; 23(11). https://www.managedhealthcareconnect.com/article/admission-criteria-facility-based-post-acute-services-0. Published November 2015. Accessed May 29, 2019.

[viii] Home health services. The Official U.S. Government Site for Medicare. https://www.medicare.gov/coverage/home-health-services.html. Accessed May 29, 2019.

[ix] Home health services. The Official U.S. Government Site for Medicare. https://www.medicare.gov/coverage/home-health-services.html. Accessed May 29, 2019.

[x] "Chapter 9: Payment issues in post-acute care," Report to. MedPAC, June 2019. http://www.medpac.gov/docs/default-source/reports/jun19_ch9_medpac_reporttocongress_sec.pdf?sfvrsn=0. Accessed November 8, 2019.

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