Impact of Outpatient Rehabilitation Medicare Reimbursement Caps on Utilization and Cost of Rehabilitation Care After Ischemic Stroke: Do Caps Contain Costs?

Objective: To estimate the proportion of patients with ischemic stroke who fall within and above the total outpatient rehabilitation caps before and after the Balanced Budget Act of 1997 took effect; and to estimate the cost of poststroke outpatient rehabilitation cost and resource utilization in these patients before and after the implementation of the caps.

Design: Retrospective cohort study.

Setting: Medicare reimbursement system.

Participants: Medicare beneficiaries from the state of South Carolina: the 1997 stroke cohort sample (N=2667) and the 2004 stroke cohort sample (N=2679).

Interventions: Not applicable.

Main Outcome Measures: Proportion of beneficiaries with bills within and above the cap before and after the cap was enacted, and total estimated 1-year rehabilitation Medicare payments before and after the cap.

Results: The proportion of patients with stroke exceeding the cap in 2004 after the Balanced Budget Act of 1997 was enacted was significantly lower (5.8%) than those in 1997 (9.5%) had there been a cap at that time (P=.004). However, when the proportion of individuals exceeding the cap among both the outpatient provider and facility files was examined, there was a greater proportion of patients with stroke in 2004 (64.6%) than in 1997 (31.9%) who exceeded the cap (P<.0001). The estimated average 1-year Medicare payments for rehabilitation services, when examining only the Part B outpatient provider bills, did not differ between the cohorts (P=.12), and in fact, decreased slightly from $1052 in 1997 to $833 in 2004. However, when examining rehabilitation costs using all available outpatient Medicare bills, the average estimated payments greatly increased (P<.0001) from $5691 in 1997 to $9606 in 2004.

Conclusions: These findings suggest that billing practices may have changed after outpatient rehabilitation services caps were enacted by the Balanced Budget Act of 1997. Rehabilitation services billing may have shifted from Part B provider bills to being more frequently included in facility charges.