Forum Session

Sorting Out the Complex World of Medicare Post-Acute Care
March 18, 2014


William J. Scanlon, PhD, Senior Consultant & Sally Coberly, PhD


Medicare's post-acute care policies have received—and continue to receive—considerable attention for potential reform efforts. Some of this interest is motivated by the growth of post-acute care spending, which has greatly exceeded that for both physicians and hospitals over the past decade. But beyond concerns about spending are questions about the appropriateness of services and outcomes. Addressing these broad issues becomes complicated because post-acute care itself is complex and heterogeneous. Despite its label, post-acute care does not always follow a hospitalization, and it is delivered by four distinct types of providers (home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals). Beneficiaries with similar conditions may receive similar services from different types of providers or, in some instances, from multiple providers during a single episode. Some services a beneficiary receives from the same post-acute provider may be covered by Medicare while others are not.

A range of proposals to address various issues associated with post-acute care have surfaced. Many are what might be called "incremental" changes to the existing prospective payment systems for the different provider types. Others involve more fundamental payment reforms that aim to create incentives to reduce fragmentation and alter patterns of care in ways that promote efficiency and quality. Among the former are proposals to calibrate payments more closely with costs to reduce high-profit margins from services to Medicare patients, align payments for similar patients and services across provider types, pay for performance, and refine criteria for appropriate use. Although Medicare already uses various forms of bundling for post-acute care, such as paying per day, per admission, or per episode, there is interest in more fundamental reform that would expand bundles to reduce fragmentation and improve efficiency. The Center for Medicare and Medicaid Innovation (CMMI) has begun testing bundles for a care episode that would include either the hospital and the subsequent post-acute care, or all the post-acute care following a hospitalization.

This Forum session examined the concerns surrounding the provision of post-acute care, discussed proposals for reform over both the short and longer term, and provided perspectives on potential reforms from program, beneficiary, and industry viewpoints.


Mark Miller, PhD (bio)
Executive Director
Medicare Payment Advisory Commission

Jonathan Blum (bio)
Principal Deputy Administrator
Centers for Medicare & Medicaid Services

Judith Feder, PhD (bio)
Institute Fellow
Health Policy Center
The Urban Institute
Professor of Public Policy
Public Policy Institute
Georgetown University

William M. Altman, JD (bio)
Executive Vice President for Strategy, Policy and Integrated Care
Kindred Healthcare, Inc.

Related Materials

Kathryn Linehan, "Medicare's Post-Acute Care Payment: A Review of the Issues and Policy Proposals," National Health Policy Forum, Issue Brief No. 847, December 7, 2012.

Medicare Payment Advisory Commission, "Post-acute care providers: Steps toward broad payment reforms," ch. 7 in Report to the Congress: Medicare Payment Policy, March 2014.

Judith Feder, "Bundle with Care--Rethinking Medicare Incentives for Post-Acute Services" (New England Journal of Medicine, vol. 369, no. 5, August 1, 2013, pp. 400-401.


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