Nursing Homes and Rehab Hospitals Square Off Over Payments

Medicare patients who need rehabilitation after a hospital stay can get their care from several types of medical providers. Depending on their medical needs and other factors, they may be able to get treatment from a specialized rehab hospital, at home with help from home health care aides or outpatient therapists, or in a nursing facility.

But the cost of care for each kind of treatment is starkly different, and the decision about where patients should get their treatment has implications for the federal health care budget and for the growing number of Americans who depend on Medicare for their health care coverage.

Currently, Medicare pays more for the care at rehab hospitals than it does at nursing facilities. However, the Medicare Payment Advisory Commission, the panel known as MedPAC that gives lawmakers guidance on Medicare policies, said in a report this year that at least for some conditions, the higher payments may not always be justified.

The MedPAC report and the recent introduction of a bill in Congress by top Republicans and Democrats reinvigorated a little-noticed but intensely-lobbied debate over how Medicare should pay for patients who need therapy after hospitalization.

Particularly for orthopedic conditions such as hip fractures or major joint replacements, patients who get care from inpatient rehab hospitals had similar traits and outcomes as those who were treated in a skilled nursing home, according to the MedPAC study published in June. Given those similarities, the commission asked, why should Medicare pay more for patients in rehab hospitals than in nursing facilities?

The commission also looked at stroke patients, but in those cases the panel found there were greater differences between the patients treated in the two different settings. Skilled nursing homes often take care of stroke patients who have a history of falling or have trouble sitting without help, while inpatient rehabilitation hospitals typically care for more people who have trouble controlling their facial motions, like swallowing.

MedPAC is not alone in proposing changes that would bring the prices for rehab hospitals and for skilled nursing homes closer together. Since 2007, both the Bush and the Obama administrations suggested reducing the price differences for patients with some conditions.

Lawmakers also are discussing ways to judge, in a standardized way, the effectiveness of different methods of providing care to patients after they leave a hospital. In one of the rare signs of bipartisan, bicameral cooperation on health care issues this year, the Democratic and Republican leaders of the House Ways and Means and Senate Finance committees introduced a bill in late June that would create a uniform way of measuring the care that home health aides, rehab therapists and nursing home staff members provide to people after a hospital stay.

Although the legislation (HR 4994) is not expected to become law soon, it sets the stage for a deeper debate later.

And lobbyists for each type of medical provider are pushing hard to convince Congress of their positions.

Rehab hospitals brought two senators who have needed therapy — Democrat Tim Johnson of South Dakota, whose brain hemorrhage in 2006 had him hospitalized for months, and Republican Mark S. Kirk of Illinois, whose 2012 stroke kept him away from Washington for a year — to a July 10 Capitol Hill briefing where the industry showcased a study indicating that the medical outcomes for patients can sometimes be better for people who are in rehab hospitals. The study, paid for by the American Medical Rehabilitation Providers Association, suggested patients returned home from stays in inpatient rehab hospitals two weeks earlier and stayed alive almost two months longer than people who received care in skilled nursing facilities.

Officials representing the rehab hospitals say they provide higher levels of service than nursing homes. Patients are supposed to get at least three hours of therapy five times per week.

The level of care in rehab hospitals and nursing homes “are very different,” said Rich Kathrins, president and CEO at Bacharach Institute for Rehabilitation in Philadelphia and vice chairman of the board of the American Medical Rehabilitation Providers Association. “I hope that lawmakers understand the implications of their policy directives and look at what’s best for beneficiaries and not just to the bottom line cost issue.”

But nursing facility lobbyists are highlighting MedPAC’s perspective.

“There are certain patients that we’ve demonstrated we are able to take care of at a lower cost, so does it make sense to have them continue to go to an [inpatient rehabilitation facility]?” asked Daniel E. Ciolek, senior director of therapy advocacy at the American Health Care Association, in an interview. “At least for a small number of conditions, we provide the same care at a lower cost.”

Ciolek acknowledged that some patients need the intense therapy that is available through a rehabilitation hospital. But he noted that rehab hospitals are not available everywhere, especially not in rural areas. He speculated that further study will probably reveal that nursing facility operators can provide care with similar outcomes to rehab hospitals for many types of patients.

MedPAC said in its report that the commission “recognizes that the services in the two settings differ; however, we question whether the program should pay for these differences when the patients admitted and the outcomes they achieve are similar.”

The one thing that both sides agree on is that the debate will continue to heat up over the next year or two.

“As far as anything being implemented, don’t expect anything immediately,” Ciolek said.

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