Changes in Patient Severity Following Implementation of the Inpatient Rehabilitation Facility Prospective Payment System

Medicare has instituted an inpatient rehabilitation facility prospective payment system. Medicare pays these facilities a predetermined rate per patient. This gives facilities incentives to provide care efficiently, since they can keep any difference between the set payment and their costs. However, it also gives them incentives to change their care and practice patterns to increase revenue. The authors examine whether fewer patients with conditions relatively costly to treat are being treated and whether they are receiving less-intense care.