Issue Brief

No. 847

Medicare's Post-Acute Care Payment: An Updated Review of the Issues and Policy Proposals
October 5, 2015


Sally Coberly, PhD


Medicare spending on post-acute care provided by home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals accounted for about 10 percent of total program outlays in 2013. The Medicare Payment Advisory Commission and others have noted several long-standing problems with the payment systems for post-acute care and have suggested refinements to Medicare's post-acute care payment systems that are intended to encourage the delivery of appropriate care in the right setting for a patient's condition. The Patient Protection and Affordable Care Act of 2010 contained several provisions that affect the Medicare program's post-acute care payment systems, as well as broader payment reforms such as bundled payment models. Subsequent legislation, including the Pathway for SGR Reform Act of 2013, the Protecting Access to Medicare Act of 2014, and the Improving Medicare Post-Acute Care Transformation Act of 2014, all contain provisions that will affect future payments to one or more post-acute care providers. This issue brief describes Medicare's payment systems for post-acute care providers, evidence of problems that have been identified with the payment systems, and policies that have been proposed or enacted to remedy those problems.

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