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A Study of Stroke Post-Acute Care Costs and Outcomes: Final Report

Publication Date
Dec 27, 2006

U.S. Department of Health and Human Services

A Study of Stroke Post-Acute Care Costs and Outcomes: Final Report

Executive Summary

Andrew Kramer, MD, Danielle Holthaus, BS, Glenn Goodrish, MS and Anne Epstein, PhD

University of Colorado, Denver, Health Sciences Center

December 28, 2006

This report was prepared under contracts #HHS-100-97-0013 and #HHS-100-00-0023 between the U.S. Department of Health and the University of Colorado. For additional information about this subject, you can visit the DALTCP home page at or contact the ASPE Project Officer, Susan Polniaszek, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. Her e-mail address is:

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.

Post-acute care (PAC) refers to care received after an acute hospitalization, which is typically provided in skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health (HH) agencies, and/or outpatient (OP) rehabilitation settings. In 2002, approximately one-third of Medicare beneficiaries discharged from hospitals utilized some form of PAC within one day of leaving the hospital. Although care received in different PAC settings varies to some extent, many experts believe that patients with similar care needs may be treated in different PAC settings and that the choice of discharge destination is often driven by factors other than patient characteristics (e.g., availability of beds, physician or family preference, practice patterns).

In an effort to contain rapid growth in Medicare PAC expenditures during the late 1980s to mid-1990s, Congress passed the Balanced Budget Act of 1997 that required the development and implementation of prospective payment systems (PPS) for all types of PAC. The PPSs have been phased in over the past eight years, beginning with SNFs in July 1998, followed by OP hospital care in August 2000, HH agencies in October 2000, and IRFs in January 2002.

This study, funded by the Office of the Assistant Secretary for Planning and Evaluation, had three primary aims, including:

1) To compare quality, outcomes, and costs of PAC episodes involving single and multiple-providers (e.g., IRF care followed by HH care, IRF care followed by OP care) provided to Medicare beneficiaries with stroke after PPS implementation.

Using stroke as a tracer condition, this study examined PAC outcomes and costs for single and multiple-provider episodes of care. Outcomes studied included return to community residence, functional outcomes (including activities of daily living (ADLs), instrumental activities of daily living (IADLs), social/role function, and function related to walking), self-reported health, and satisfaction. Costs included cost to the Medicare program and to beneficiaries. Few prior studies have examined outcomes and costs of multiple-provider episodes, particularly those involving OP rehabilitation care, and no major studies have been conducted subsequent to PPS implementation in all PAC settings. This study, therefore, represents a unique opportunity to explore these various facets of PAC during the post-PPS era.

2) To compare and contrast various quality of care and outcome measures that can be used across PAC settings.

This study explored whether a core set of measures can be identified that captures outcomes and quality of PAC episodes involving both single and multiple-providers. Given the current policy interest in uniform assessment for quality monitoring and comparing outcomes across settings, this research provides invaluable information in moving toward this goal.

3) To examine the effect of PPS implementation on patterns of PAC utilization (including IRF, SNF, and HH agency) for stroke patients.

This objective involved analysis of national claims data to complement the in-depth primary data analysis conducted for the first objective. Recent research on the use of IRF care before and after the implementation of the IRF PPS was conducted by RAND; however, this work was limited to only the early stages of the IRF PPS (the first year of IRF PPS implementation). No studies to date have assessed the effects of PPS in terms of PAC utilization and patterns of care following PPS implementation in all PAC settings. Given the financial incentives that exist under the different PPSs, PAC utilization patterns are likely to be altered, with the potential to influence cost and quality of care.


This study of PAC included a national sample of 88 PAC providers comprised of 35 IRFs, 33 SNFs, and 20 HH agencies in 20 states. Subject eligibility was limited to Medicare beneficiaries admitted to PAC from the hospital for an acute stroke, who were at least 65 years of age and enrolled in the Medicare fee-for-service program rather than managed care. Excluded were individuals who were comatose, those residing in a long-term care facility prior to this stroke, and those without a proxy if cognitively impaired or with severe speech/language impairment. The sample included a total of 674 subjects enrolled between late 2002 and early 2005: 555 whose first admission was to IRF, 62 whose first admission was to SNF, and 57 whose initial admission was to HH.

Patient characteristics analyzed in the study included demographics, and pre-stroke condition in available supports, function, and global health rating. Acute stroke characteristics included stroke characteristics and comorbidities. At the time of admission to PAC, the assessment included cognition, visual neglect, speech/language, function, and depression. Cognition and depression were assessed by direct interview with the patient (or proxy), whereas PAC admission function was obtained from the Minimum Data Set for SNFs, the Inpatient Rehabilitation Facility Patient Assessment Instrument for IRFs, and the Outcome and Assessment Information Set (OASIS) for HH agencies. In addition, a range of facility characteristics and community characteristics were collected.

Outcome and quality measures included: location at 90 days; functional recovery in four domains; recovery in self-rated overall health; and patient/proxy satisfaction. Location measures examined both nursing home vs. community residence and whether the 90-day residence was an equally independent living situation to the setting prior to the stroke. The functional recovery measures included the domains of ADLs, IADLs, ambulation, and social/role function. Function was assessed for multiple activities within each of these domains by an on-site data collector by interview for the baseline period prior to stroke, and by telephone for the 90-day follow-up.

Cost analyses included the costs to Medicare and to beneficiaries for all types of care. These costs were obtained from Part A and Part B claims data. Utilization data were obtained from Medicare claims for services covered by Medicare.


Patterns of Post-Acute Care:

  • Nearly 170 different PAC patterns were identified in 90 days.
  • Volume of direct stroke admissions from the hospital for Medicare patients not enrolled in managed care decreased markedly in both SNFs and HH agencies from the period prior to PPS.
  • Patterns were predominately multiple-provider episodes beginning with IRF. Length of initial IRF stays decreased by two days between 2003 and 2004.
  • Sixty percent of IRF admissions used a second PAC provider and 30 percent used three or more in 90 days.
  • About a third of direct admissions to SNFs used a second PAC provider after the SNF and 29 percent used three or more in 90 days.
  • Only 20 percent of direct admissions to HH agencies used a subsequent PAC provider in 90 days.

Patient Characteristics:

  • SNF patients were the most disabled prior to the stroke; most cognitively and physically impaired following their stroke; and had the greatest speech/language impairments and symptoms of depression after their stroke.
  • On the other end of the spectrum, HH patients were more functional with less cognitive impairment than IRF patients, although they were more similar to IRF patients than SNF patients.
  • Among patients admitted directly to IRF, IRF to SNF (IRF–>SNF) patients had the greatest cognitive impairment, visual impairment, speech/language impairment, and functional impairment upon admission to PAC. Their characteristics were similar to the patients discharged directly from acute hospital to SNF.
  • Patients admitted to HH from IRF were similar to patients admitted to OP from IRF with respect to pre-morbid status, cognition, and most functional measures following their stroke, but they had lower incomes.


  • Descriptive outcomes for all patients admitted to IRF, HH, or SNF followed the patterns one would expect based on patient characteristics: the best recovery of function occurred among HH patients, the worst recovery occurred among SNF patients, and IRF patients were in the middle. Due to the differentiation in patient characteristics based on initial provider setting, it was not feasible to equitably compare outcomes for all patients.
  • IRF–>SNF patients had comparable outcomes to patients discharged directly to SNF in 90-day residence and in functional recovery. Satisfaction appeared to differ between these two options, with greater satisfaction in terms of goals and progress in the IRF–>SNF group, and greater satisfaction with discharge preparation and family preparation in the direct SNF group.
  • Relative to patients discharged to HH following IRF, outcomes for patients admitted to OP care following IRF were comparable with respect to 90-day residence and significantly better in two dimensions of functional recovery, even after risk adjustment.

Costs and Service Utilization:

  • Descriptive cost comparisons among direct discharges to IRF, SNF, and HH followed the patterns one would expect based on reimbursement systems. Costs of care for stroke patients discharged directly to IRFs were generally twice as high as cost for SNF patients in the PAC episode and eight times as high as costs for HH patients for PAC services during 90 days.
  • Relative to direct discharges to SNF, PAC costs for IRF–>SNF patients were three times higher, and 90-day costs for IRF–>SNF patients were twice as high. Total PAC length of stay for the IRF–>SNF group was about 73 days in contrast to 46 days for the SNF group.
  • Relative to IRF–>OP costs, total cost per PAC episode was $2,200 higher and total cost per 90 days was $5,200 higher for IRF–>HH patients. Despite the lower costs, IRF–>OP patients received about 40 therapy visits in contrast to 21 therapy visits for IRF–>HH patients in PAC episodes with comparable duration. However, average PAC beneficiary costs were $400 higher for the IRF–>OP group.
  • The 90-day costs were also comparable between IRF–>OP patients and IRF patients who were discharged to a residence because the latter group required more acute and additional PAC services after they were discharged to the community and the initial PAC episode was complete.

National Trends:

  • Admissions of stroke patients to SNFs directly from hospital have been steadily declining since 1998, and admissions to IRFs and acute long-term care hospitals have been increasing.
  • The number of high-volume SNFs and IRFs is declining, with patients more evenly distributed among providers.
  • Even basic characteristics, such as age, differed significantly between SNF and all IRF patients. However, the 25 percent of IRF discharges who received care in SNF following IRF have characteristic similar to patients who went directly to SNF.
  • Length of stay significantly declined in IRFs and also freestanding SNFs since PPS was implemented.


  • A core group of self/proxy-reported functional measures exist that address different dimensions of function and are useful for comparing outcomes across both single and multiple-provider episodes.
  • These measures are hierarchical in terms of how stroke patients recover function.
  • Location at 90 days and return to an equally independent setting were also valid global outcomes for PAC.

Policy Implications

Declining lengths of stay in the IRF setting and discharge to subsequent PAC providers, resulting in multiple-provider episodes, are natural consequences of the IRF per discharge PPS. That is, the incentive exists to admit patients to IRF, contain costs with a shorter stay in the IRF, and then discharge patients to a second type of PAC provider, which could be a SNF, HH agency, or OP care. This response is similar to declining acute hospital lengths of stay and the increased use of IRF, SNF, and HH care following the implementation of the per discharge acute hospital PPS. As per discharge payments for IRF care are readjusted based on length of stay trends, savings in IRF payments may help to offset the costs of the additional care in subsequent providers. However, the impact on quality of care, outcomes, and costs as a result of this discontinuity is important to monitor.

For the diagnosis of stroke, the increased use of IRFs and decline in use of SNFs immediately following the hospitalization suggests that IRFs have an increasing incentive to admit stroke patients under PPS, which may be accompanied by a decreased incentive in SNFs for admitting stroke patients. This could occur because payment rates for stroke patients in IRFs are among the most profitable based on the case mix groups and because other policies such as the 75 percent rule may encourage IRFs to admit patients with diagnoses such as stroke. SNFs may have difficulty covering the costs of the therapy services for stroke patients requiring substantial rehabilitation (which is the case for many stroke patients discharged directly from the hospital). Because the highest Resource Utilization Group rehabilitation category includes patients with 12 hours of therapy per week, and under PPS SNFs have no incentive to provide more than 12 hours of therapy per week, patients requiring more therapy are likely to be admitted to IRFs.

The HH PPS includes a substantial payment rate increase if ten therapy visits are provided; however, there is no payment incentive to admit patients who require any more than ten therapy visits. In combination, the PPS could result in greater differences in the patients admitted to each PAC provider from the hospital because of their need for and ability to tolerate therapy.

For the subgroup of stroke patients discharged to IRF and subsequently a SNF (about 25 percent of discharges to IRF from hospital), substitution with patients discharged directly to SNFs appears to exist. The major difference was that the IRF–>SNF episodes were almost twice as likely in communities with high IRF use rates and occurred more frequently in urban areas, suggesting differences in practice patterns. Overall, 60 percent of these patients had cognitive impairment, 75 percent had significant functional impairment, and 25 percent met strict criteria for depression. Nevertheless, outcomes were comparable between the IRF–>SNF group and those admitted directly to SNFs, whereas costs were 2-3 times higher for IRF–>SNF patients. From a policy perspective, if these individuals can be identified upon acute hospital discharge, then direct discharge to SNF would be more cost-effective. One way to encourage more cost-effective care would be to pay IRFs at a reduced payment rate equivalent to the SNF level of care for IRF days in cases when the patient is ultimately discharged to a SNF. A similar policy is currently in place whereby Medicare pays IRFs a lower rate for patients with stays of less than four days. Under this scenario, even if patients were to receive a very brief trial of rehabilitation in an IRF, as soon as it is apparent they require longer term, less intense rehabilitation, they would be discharged to a SNF.

The cost-effectiveness of OP services subsequent to IRF care was very apparent in this study. Stroke patients who received OP care subsequent to an IRF stay had better outcomes, received more therapy visits, and at lower cost to Medicare relative to patients discharged to HH agencies subsequent to an IRF stay. The comparability between these HH patients and OP patients raises questions about why some patients are considered "homebound" and others are not. While most of the patients receiving more HH or OP care following IRF may meet the relatively loose definition of "homebound," OP services were more likely to be used by stroke patients with higher incomes. Not surprisingly, the IRF–>OP pattern resulted in higher beneficiary costs because of the larger coinsurance. Reducing the cost to beneficiaries by reducing the OP coinsurance might increase the utilization of OP services relative to home care services following the IRF stay, which would be offset by fewer patients using higher cost HH services. Even if more patients in total were to use OP services (i.e., those previously discharged home with no further care), total cost would not be impacted for such patients due to the costs of Medicare services (increased hospitalizations and subsequent PAC services) that would have been needed by these patients if they had not received OP care. The difficulty in paying the coinsurance associated with OP service and the potential lack of reliable transportation may encourage people to use the more expensive HH care rather than OP services. From a policy perspective, we need to begin to recognize the important role of OP care in PAC used either immediately following the acute stay or subsequent to other PAC providers. It may offer the most cost-effective benefit for patients in many circumstances.

A uniform set of core measures is required to assess PAC outcomes for patients admitted to single or multiple PAC settings. The current setting-specific assessment tools cannot be used for this purpose because they use different elements, only some of which can be cross-walked, and have different follow-up intervals, making it impossible to compare change over fixed time periods. For outcome measurement, a baseline time point and a fixed follow-up point are required, regardless of the number of PAC providers that are utilized by a patient. An ideal baseline is pre-morbid function so that one can determine the extent to which prior function was recovered, and 90 days represents a follow-up point at which most PAC is completed. Functional measures across a range of domains, such as ADL, IADL, ambulation, and social/role function, are critical to assess because they are unique functional dimensions that recover at different rates. Changes in residence and global health ratings from baseline to 90 days are excellent general markers of rehabilitation success.

From this national study of PAC prospective payment between late 2002 and early 2005, we observed major changes in patterns of PAC utilization for stroke patients. Overall, providers were strongly responding to the PPS incentives. Substitution between patients directly discharged to SNFs and those discharged to SNF following IRF, and between patients discharged to OP following IRF and discharged to HH following IRF, showed that cost-effectiveness of PAC may be improved through changes in incentives. Continued collection of uniform outcome and cost data is essential if we intend to maximize opportunities for improving PAC provided to Medicare beneficiaries.

The Full Report is also available from the DALTCP website ( or directly at