Function-based payment model for inpatient medical rehabilitation: An evaluation

Objective: To describe the components of a function-based prospective payment model for inpatient medical rehabilitation that parallels diagnosis-related groups (DRGs), to evaluate this model in relation to stakeholder objectives, and to detail the components of a quality of care incentive program that, when combined with this payment model, creates an incentive for providers to maximize functional outcomes. Data Sources: This article describes a conceptual model, involving no data collection or data synthesis. Data Synthesis: The basic payment model described parallels DRGs. Information on the potential impact of this model on medical rehabilitation is gleaned from the literature evaluating the impact of DRGs. The conceptual model described is evaluated against the results of a Delphi Survey of rehabilitation providers, consumers, policymakers, and researchers previously conducted by members of the research team. Conclusions: The major shortcoming of a function-based prospective payment model for inpatient medical rehabilitation is that it contains no inherent incentive to maximize functional outcomes. Linkage of reimbursement to outcomes, however, by withholding a fixed proportion of the standard FRG payment amount, placing that amount in a ''quality of care'' pool, and distributing that pool annually among providers whose predesignated, facility-level, case-mix-adjusted outcomes are attained, may be one strategy for maximizing outcome goals. (C) 1996 by the American Congress of Rehabilitation Medicine and the American Academy of Physical Medicine and Rehabilitation