A new Medicare payment policy on readmissions may place more pressure on post-acute providers to coordinate care with the general acute-care hospitals in their community. The Centers for Medicare & Medicaid Services (“CMS”) is in the process of adopting a new policy for reducing payments under the inpatient prospective payment system (“IPPS”) to those hospitals with high readmission rates for patients with certain conditions. As a result, hospitals paid under the IPPS may incur a payment penalty if a skilled nursing facility (“SNF”), long-term acute care hospital (“LTCH”), inpatient rehabilitation facility (“IRF”) or other post-acute care provider transfers a patient or resident back to the hospital for additional inpatient services. This policy change provides a powerful incentive to
coordinate care and standardize procedures across providers.

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