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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.

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