MedPAC considers '4-in-1' post-acute care payment system

Medicare written on paper with a stethoscope
Post-acute care costs Medicare about $60 billion every year. (Design491/Getty Images)

The Medicare Payment Advisory Commission (MedPAC) is weighing a policy proposal that would bring payments for four post-acute settings into one system, another step in the push to promote site-neutral payments.

Four post-acute care (PAC) settings—skilled nursing facilities (SNFs), inpatient rehabilitation facilities, long-term care (LTC) hospitals and home health agencies—operate under disjointed regulatory and statutory requirements. At its September meeting on Thursday, MedPAC—which makes policy recommendations to CMS—considered bringing those separate silos under one unified payment system.

According to Evan Christman, a senior analyst who presented this proposal to the commission, it may be better to qualify payments based on patient characteristics rather than site of care to “reflect the full range of beneficiaries’ PAC needs.”


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Post-acute care for patients in fee-for-service Medicare cost the program about $60 billion annually, MedPAC noted in its June report (PDF).

RELATED: Bundled payments drive hospitals to reduce referrals to SNFs, improve coordination

The proposal would split all PAC providers into two tiers. The first, or “general,” tier would encompass the majority of patients.

Medicare would need to consider what requirements are or should be common to all PAC providers in this tier, such as the amount of nursing (eight-hour, 24-hour, etc.) or physician supervision (e.g., visit daily, every few weeks or every 30 days).

The second, or “specialized,” tier would include patients with the highest care needs, possibly using a list of conditions. Medicare could update these categories over time as clinical needs, provider capacity and health technologies change over time.

This proposal would align neatly with other efforts to institute site-neutral payments, one commissioner noted. In a recent proposal, the Centers for Medicare & Medicaid Services highlighted the stark price variation between clinic visits in a hospital-owned outpatient facility and a physician's office.

RELATED: CMS proposes site-neutral payments in OPPS rule aimed at boosting provider competition

Currently, the four post-acute settings have different requirements for benefit coverage, Conditions of Participation (CoPs) for providers and facility criteria. Each setting sees a wide range of patients, and they provide similar services. However, they vary widely in cost, even when they provide the same services, partially due to the prospective payment system and varying regulatory requirements.

Some commissioners felt it would be better to exclude home health in this policy. Compared to the other settings, home health involves less direct involvement with physicians and registered nurses.

Commissioners also considered how this policy could improve the value of care, how to measure the policy’s outcomes and whether to exempt accountable care organizations.

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