Can “Severity-Intensity” Be the Conceptual Basis of an Alternative Payment Model for Therapy Services Provided Under Medicare?

Abstract

In its landmark review of the causes and consequences of disability, the Institute of Medicine (IOM) confirmed the importance of rehabilitation in restoring and maintaining quality of life, especially among older adults.1 In an effort to meet the rehabilitation needs of this population, Medicare has covered outpatient therapy services since the enactment of Title XVIII of the Social Security Act in 1965. In 2006, 4.4 million individuals received outpatient therapy services (physical therapy, occupational therapy, and speech and language pathology), representing 9.7% of the 45.5 million beneficiaries receiving Medicare Part B services.2 In its follow-up report, The Future of Disability in America ,3 the IOM further concluded that antiquated policies, which would include those policies undergirding current payment methodology for outpatient rehabilitation services, may delay or interfere with the individual's eventual functioning. In order to achieve payment policies for rehabilitation services that promote quality of life while prudently allocating resources, the concepts underlying these policies should receive the same level of reflection that is now routinely applied to the scientific concepts that support best clinical practice. The purpose of this article is to present and discuss a conceptual basis for an alternative payment system for outpatient therapy services based on the therapist's judgment of severity of the patient's condition and expected intensity of treatment for that condition. Medicare coverage and payment policies are based on the setting in which they are provided; therefore, policies among the various settings may differ significantly. Medicare Part B, which covers outpatient therapy, requires that the services be (1) provided by a skilled professional as defined in the Center for Medicare & Medicaid Services' (CMS) qualified provider language, (2) medically necessary (ie, deemed appropriate and effective for the patient's condition), and (3) reasonable in terms of frequency and duration. Services provided to …