To examine the influence of facility and aggregate patient characteristics of inpatient rehabilitation facilities (IRFs) on performance-based rehabilitation outcomes in a national sample of IRFs treating Medicare beneficiaries with hip fracture.Secondary data analysis.U.S. Medicare-certified IRFs (N=983).Data included patient records of Medicare beneficiaries (N=34,364) admitted in 2009 for rehabilitation after hip fracture.Not applicable.Performance-based outcomes included mean motor function on discharge, mean motor change (mean motor score on discharge minus mean motor score on admission), and percentage discharged to the community.Higher mean motor function on discharge was explained by aggregate characteristics of patients with hip fracture (lower age [P=.009], lower percentage of blacks [P<.001] and Hispanics [P<.001], higher percentage of women [P=.030], higher motor function on admission [P<.001], longer length of stay [P<.001]) and facility characteristics (freestanding [P<.001], rural [P<.001], for profit [P=.048], smaller IRFs [P=.014]). The findings were similar for motor change, but motor change was also associated with lower mean cognitive function on admission (P=.008). Higher percentage discharged to the community was associated with aggregate patient characteristics (lower age [P<.001], lower percentage of Hispanics [P=.009], higher percentage of patients living with others [P<.001], higher motor function on admission [P<.001]). No facility characteristics were associated with the percentage discharged to the community.Performance-based measurement offers health policymakers, administrators, clinicians, and consumers a major opportunity for securing health system improvement by benchmarking or comparing their outcomes with those of other similar facilities. These results might serve as the basis for benchmarking and quality-based reimbursement to IRFs for 1 impairment group: hip fracture.