How are Medicare payments for inpatient rehabilitation facilities determined?

Medicare payments for inpatient rehabilitation facilities are determined by the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS). This system specifically establishes a fixed payment rate for rehabilitation services based on the patient's classification and the complexity of their condition.

The IRF PPS takes into account various factors such as the patient's diagnosis, the expected length of stay, and the resource needs associated with their rehabilitation. This approach allows for more predictable reimbursement based on the services rendered, enhancing efficiency and ensuring that facilities are compensated appropriately for the care they provide.

Other payment methodologies, such as the Outpatient Prospective Payment System (OPPS), apply to outpatient services and would not be relevant for inpatient rehabilitation. The fee-for-service model generally relates to separate payments based on individual services provided rather than bundled payments for care episodes, making it less aligned with how rehabilitation services are structured under the IRF PPS. Additionally, relying on individual agreements with providers would lack the consistency and standardization that the IRF PPS aims to provide across all rehabilitation facilities.