How are payments calculated under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System?

Payments under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System are indeed calculated based on patient characteristics and the amount of therapy received. This system is designed to ensure that reimbursement reflects the complexity and needs of the patient population being treated in rehabilitation facilities.

Specifically, the IRF PPS uses a classification system called the IRF-Patient Assessment Instrument (IRF-PAI), which collects data on patient demographics, diagnoses, functional status, and the intensity of rehabilitation therapy. These elements determine the appropriate payment rates, enabling facilities to be reimbursed in a way that accounts for both the type of care provided and the individual needs of patients. By focusing on these factors, the system promotes the delivery of tailored rehabilitation services to improve patient outcomes.

In contrast, payments that are based solely on diagnosis-related groups (DRGs) would not capture the nuances of therapy intensity or the level of patient need, which are critical in rehabilitation settings. A flat fee per patient disregards the variation in cases and the individualized care that patients often require in an IRF. Similarly, geographical location alone does not play a role in determining payment under the IRF PPS; instead, it's the interplay of patient characteristics and therapy that defines reimbursement levels.