Estimating Variation in Stay-Level and Facility-Level Profitability in Medicare's Inpatient Rehabilitation Facility Payment System

Medicare beneficiaries who need intensive rehabilitation services following an acute hospital stay are sometimes treated in inpatient rehabilitation facilities (IRFs), where they must be able to tolerate and benefit from intensive therapy. An earlier analysis by the Medicare Payment Advisory Commission (MedPAC) found that some case types under the IRF payment system are more profitable than others and that provider differences in the coding of functioning status could factor in IRF profitability. Differences in profitability for different types of patients could motivate providers to admit some types of patients over others, which could reduce access to care for some patients and affect quality of care.