The Medicare Payment Advisory Commission (MedPAC) has released its 2014 Data Book on Health Care Spending and the Medicare Program. The volume provides detailed information regarding national health care and Medicare spending and utilization, sector profit margins, Medicare and dual-eligible beneficiary demographics, Medicare quality, Medicare beneficiary and other payer liability, and related issues.
Recent Congressional hearings on health policy issues include the following:
- A House Energy and Commerce Health Subcommittee “21st Century Cures Roundtable” discussed steps Congress can take to bridge the gap between medical advances and the regulatory policies that govern them, and ultimately advance digital and personalized health care. The panel also released a related white paper on digital health care and is seeking feedback on this topic through July 22, 2014.
- The Energy and Commerce Oversight Subcommittee held a hearing on “Medicare Program Integrity: Screening Out Errors, Fraud, and Abuse.” The Committee also held hearings on health care access under the ACA.
- The Senate Special Committee on Aging held a hearing entitled “State of Play: Brain Injuries and Diseases of Aging.”
- The Ways and Means Health Subcommittee held a hearing on MedPAC's June Report to the Congress on Medicare delivery reforms.
- The House Oversight and Government Reform Committee held a hearing on health insurance company profits under the ACA.
On June 13, 2014, the Medicare Payment Advisory Commission (MedPAC) released its June 2014 Report to the Congress on Medicare and the Health Care Delivery System. Among other things, MedPAC addresses ways to align Medicare fee-for-service (FFS), Medicare Advantage, and accountable care organization policies on payment, risk adjustment, and quality measurement. MedPAC also discusses various FFS reforms, including post-acute care reforms to promote payment consistency across settings and bonus payments to support primary care. Finally, MedPAC discusses changing income eligibility standards for the Medicare Savings Programs to help low-income Medicare beneficiaries afford out-of-pocket costs, and it examines the impact of medication adherence on health spending.
In early April, Reed Smith hosted an enlightening, industry-leading conference on post-acute care in Washington, D.C. The conference, entitled “Reed Smith 2014 Washington Health Care Conference: Focus on Post-Acute Care," brought together a panel of experts to discuss episodic care, bundling models, and alternative payment and delivery systems. The conference also featured other speakers who presented from the perspective of investors and Capitol Hill, along with a keynote address from American Enterprise Institute resident scholar Dr. Norman Ornstein.
Policy Discussion on Payment Models
The conference started with a panel discussing bundling initiatives and other alternative payment models. The panel featured Barbara Gage, Ph.D., Fellow and Managing Director of Engelberg Center for Health Care Reform at the Brookings Institution; Judy Feder, Ph.D., Professor at Georgetown University; Vincent Mor, Ph.D., Professor at Brown University School of Medicine; and James Michel, Director for Medicare Research & Reimbursement at the American Health Care Association (“AHCA”). The panel brought with them decades of experience in health care policy and research, and a deep knowledge of post-acute care providers’ current reimbursement systems, in addition to models expected to reform payment for post-acute services in the future.
Dr. Gage spoke first, and introduced bundling by discussing the triple aim adopted by the Centers for Medicare & Medicaid Services (“CMS”): achieve better care for patients, better communities’ health, and lower costs by improving the health care system. She explained how new payment models—including bundled payment initiatives and accountable care organizations—strive to accomplish the above-mentioned triple aim. Gage discussed whether the post-acute setting in which a patient receives treatment distinguishes the patient’s outcome and the level of resources that different post-acute settings (e.g., home health, skilled nursing facilities (“SNF”), inpatient rehabilitation facilities (“IRF”), or long-term acute care hospitals (“LTCH”)) furnish to patients. Gage described in great detail the arguments in favor of bundled payments, emphasizing that one of the benefits of a bundled payment model is that it forces communication across all care settings.
Dr. Feder, on the other hand, urged caution as reimbursement moves to new models. She stressed that bundled payment models, for example, create powerful incentives to potentially reduce or limit the care furnished to patients, and therefore could result in reduced quality of care. Feder explained that bundling is not new, and that, e.g., payers have bundled in the inpatient hospital setting for 30 years. Feder pointed out that when Medicare implemented diagnosis-related groups in the inpatient hospital prospective payment system, hospital length of stay “dropp[ed] like a stone.” Feder underscored that the biggest challenges arise from patients whose health is deteriorating, and explained that the number of home health visits, for instance, are the lowest when patient acuity is the highest. In order to ensure adequate, appropriate, and high-quality care for patients, Feder suggested that policymakers thoughtfully develop and implement any new payment system over time, and incorporate quality mechanisms that serve to protect patients. Feder suggested that good patient data and strong accountability measures are essential to any bundled payment program.
After Feder spoke, Dr. Mor took the podium and analogized capitation versus fee-for-service as being “between the devil and the deep blue sea.” He further explained that fee-for-service reimbursement models have encouraged runaway costs and increased utilization, and that there is a lack of provider accountability and responsibility. In contrast, he explained that in capitation reimbursement models, there is an inherent incentive to deny care. Mor discussed how policymakers can ensure patients receive quality care from providers, and raised a number of thought-provoking questions, such as whether a SNF or other post-acute provider should be responsible for rehospitalization after the discharge of a patient, and whether low rehospitalization reflects overall high-quality care. Mor urged the development of a common assessment tool that includes hospital assessment data in order to more accurately measure post-acute quality and case-mix. He also recommended that CMS use the “Welcome to Medicare” assessment and other periodic beneficiary assessments to obtain risk profiles for patients. Mor ended his presentation by suggesting that while capitation models—such as bundling—are preferable to fee-for-service because one entity is responsible for patients’ care, capitation models face challenges as well, including how to properly measure case-mix and outcomes.
James Michel from AHCA noted the operational challenges associated with bundled payments. For example, it is difficult for post-acute providers to assume the responsibility for patients after the post-acute provider discharges a given beneficiary. Michel also stated that the Center for Medicare & Medicaid Innovation Bundled Payments for Care Improvement initiative’s models incentivize low-cost providers to participate, but providers who recognize they have higher costs than the community average will not participate because of the risk that they will miss the spending target, resulting in a payment to the government. Michel noted that AHCA has developed its own bundled payment proposal, in part to preserve a process in which patients and their families can decide where the patient should be treated after an acute stay. The AHCA bundled payment proposal includes four proposed episodes (e.g., major respiratory condition and septicemia) that would account for approximately 60 percent of all SNF care and more than 50 percent of all post-acute care.
Wall Street Perspective
Jay Barnes, a Senior Vice President for Healthcare Investment Banking at Jefferies, LLC, spoke from the Wall Street perspective, addressing the current appetite for deals in the post-acute space. He described a tepid outlook for post-acute investment stemming from the uncertainty of the future payment models and the changing regulatory landscape, particularly with regard to LTCHs. He informed attendees that the private equity market has been non-existent in the post-acute space because it is challenging to create projection models when future reimbursement for post-acute care remains murky. He explained that the post-acute transactions occurring are largely driven by real estate. For example, Barnes described the recently announced Emeritus Senior Living and Brookdale Senior Living merger as driven by real estate.
Cate McCanless, Senior Policy Analyst at Brownstein Hyatt Farber Schreck, provided an insightful overview of Medicare activity on Capitol Hill. She explained that Congress has focused on post-acute care because of the perceived “comfortable” margins achieved by post-acute providers (according to the Medicare Payment Advisory Commission). McCanless also described the outlook for the discussion draft of the Improving Medicare Post-Acute Care Transformation (“IMPACT”) Act of 2014, released by the House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sandy Levin (D-Mich.), along with Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah), March 18, 2014. The IMPACT Act draft includes one measure discussed by Mor during the bundling panel: the reporting of common data across post-acute providers, and the required reporting by acute-care hospitals of patient assessment data gathered in advance of discharge. McCanless also explained that while there has been some Congressional momentum in eliminating Medicare's sustainable growth-rate (“SGR”) formula in order to move to an alternative payment model, such momentum may lose steam this year now that a temporary patch has been enacted, because eliminating the SGR would be expensive, and it is an election year. McCanless pointed out certain post-acute policy proposals that would result in cost savings, such as reducing the SNF payment update by 1.1 percent, which would save an estimated $12 billion, and equalizing certain payments for SNFs and IRFs, which would save an estimated $1 billion; these provisions could be targets for offsets for future Medicare reforms.
Impact of Political Polarization on Health Policy
Dr. Norman Ornstein, noted observer of Congress and politics, and keynote speaker at Reed Smith’s inaugural Health Care Conference, closed the session with a thoughtful discussion regarding the current state of American politics. He described not just the polarization, but also the tribalism, of American politics today, depicting a broken American political system where opposing parties have adopted a mantra of, “if you support it, I am against it.” Despite Ornstein’s bleak description of the current state of politics, he offered some suggestions for reform, including incentivizing citizens to vote. He argued that if more of the American public is engaged, politicians must meet in the middle on at least some policy debates.
In all, the inaugural Reed Smith Health Care Conference led to provocative discussions and a deeper understanding of the political climate and policy recommendations likely to impact—or even transform—post-acute care in the not-so-distant future. We look forward to next year’s conference.
The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on Medicare payment policy, including payment update recommendations for all the major Medicare fee-for-service payment (FFS) systems, limited recommendations related to the Medicare Advantage (MA) program, and a status report on the Medicare Part D program. The following are highlights of the recommendations for 2015 (many of which were recommended previously):
- MedPAC recommends a 3.25% update to inpatient and outpatient hospital payment rates, concurrent with two changes that would institute site-neutral payments among settings. First, Congress should direct the HHS Secretary to reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications. Second, MedPAC recommends reducing payment for long-term care hospital (LTCH) services furnished to patients whose illness is not characterized as chronically critically ill (CCI) to the same rate that an acute care hospital would be paid for such care; savings from this provision would fund an outlier pool for acute care hospitals that treat costly CCI patients.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory updates that includes a higher update for primary care services than for specialty care services. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments from overpriced to underpriced services; and relative value unit reductions to achieve fee schedule savings.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2015, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility (SNF) market basket update. Congress also should direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing with an initial reduction of 4% and subsequent reductions until Medicare’s payments better align with providers’ costs. Moreover, Congress should direct the Secretary to reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization during Medicare-covered stays.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, and establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use. In addition, Congress should direct the Secretary to reduce payments to home health agencies with relatively high risk-adjusted rates of hospital readmission.
- Congress should eliminate the update to hospice rates for FY 2015 and adopt a series of previous MedPAC payment reform recommendations.
- Congress should eliminate the 2015 updates for outpatient dialysis services and direct the Secretary to establish a quality measure that assesses poor outcomes related to anemia in the End-Stage Renal Disease Quality Incentive Program, revise the low-volume adjustment, and audit dialysis facilities’ cost reports.
- Congress should eliminate the FY 2015 payment updates for inpatient rehabilitation facilities and LTCHs.
- With regard to Medicare Advantage (MA), MedPAC recommends that Congress: (1) direct the Secretary to determine payments for employer-group MA plans in a manner more consistent with the determination of payments for comparable non-employer group plans; and (2) include the Medicare hospice benefit in the MA benefits package beginning 2016.
Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies.
On March 6-7, 2014, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss a number of Medicare payment and policy issues, including: site-neutral payments for select conditions treated in inpatient rehabilitation facilities and skilled nursing facilities; developing payment policies to promote the use of services based on clinical evidence; measuring quality in Medicare delivery systems; payment for primary care; aligning Medicare benchmarks across payment models; and Medicare Advantage risk adjustment.
The Medicare Payment Advisory Commission (MedPAC) has released its 2013 Data Book on Health Care Spending and the Medicare Program. The publication provides information on national health care and Medicare spending and utilization, Medicare and dual-eligible beneficiary demographics, Medicare quality, Medicare beneficiary and other payer liability, and related issues.
The Medicare Payment Advisory Commission (MedPAC) has released its June 2013 Report to the Congress on Medicare and the Health Care Delivery System. The report examines a number of potential ways to reform Medicare, including the following:
- Redesigning the Medicare benefit. MedPAC continues to discuss the concept of competitively determined plan contributions (CPC), under which Medicare beneficiaries could receive care through either a private plan or traditional fee-for-service, but the premium paid by the beneficiary could vary depending on the coverage option chosen. The federal government’s payment for a beneficiary’s care would be determined through a competitive process comparing the costs of available options for coverage. The report identifies key issues to be addressed if the Congress wishes to pursue a policy option like CPC, such as how benefits could be standardized for comparability, how to calculate the Medicare contribution, and the structure of subsidies for low-income beneficiaries.
- Reducing Medicare payment differences across sites of care. MedPAC notes that Medicare payment rates often vary for similar services provided to similar patients, simply because they are provided in different sites of care (e.g., physician’s office vs. hospital outpatient department). The report identifies services that may be eligible for equalizing or narrowing payment differences across settings.
- Bundling post-acute care services. MedPAC explores the implications for quality and program spending for different design features of post-acute care payment bundles, such as the services included, the length of time covered by the bundle, and the method of payment.
- Reducing hospital readmissions. MedPAC suggests further refinements to improve incentives for hospitals and generate program savings through reduced readmissions, including proposals to address the effect of random variation on hospitals with small numbers of cases, the inability of the industry to reduce average penalties with improved performance, the correlation of patient income and readmission rates, and the inverse relationship between readmissions and mortality for cardiac patients.
- Payments for hospice services. MedPAC presents information on the prevalence of long-stay patients and the use of hospice services among nursing home patients to inform future hospice payment reforms. MedPAC also provides additional information supporting its March 2009 recommendations to revise the hospice payment system.
- Improving care for dual-eligible beneficiaries. MedPAC discusses the potential role that federally qualified health centers and community health centers can play in coordinating care for Medicare-Medicaid dual-eligible beneficiaries.
In addition to discussing these delivery reforms, the MedPAC report addresses Congressionally-mandated reviews of the following topics: Medicare ambulance add-on payments; geographic adjustment of fee schedule payments for the work effort of physicians and other health professionals; and Medicare payment for outpatient therapy services.
MedPAC has released its annual report to Congress on Medicare Payment Policy, including payment update recommendations for all the major Medicare FFS payment systems and limited Medicare Advantage (MA) recommendations. The report also includes data on the status of the MA and Medicare Part D programs, including information about enrollment, plan options, and beneficiary cost-sharing. Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies. Major recommendations include the following (many of which were included in previous reports):
- Congress should increase payment rates for inpatient and outpatient hospital prospective payment systems by 1%, and require the difference between the statutory update and the recommended 1% update be used to offset payment increases due to documentation and coding changes and to recover past overpayments.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory fee-schedule updates. This proposal, first offered in October 2011, would combine a freeze in payment levels for primary care and, for all other services, annual payment reductions followed by a freeze. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments to underpriced services, and changes to the structure of accountable care organization shared savings payments.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2014, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility market basket update, and direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing payment as soon as practicable.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, establish a per episode copay for home health episodes that are not preceded by hospitalization or post-acute care use, and expand program integrity efforts.
- Congress should eliminate the update to hospice rates for FY 2014 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
- Congress should eliminate the 2014 updates for outpatient dialysis services, inpatient rehabilitation facilities, and long-term care hospitals.
- With regard to Medicare Advantage, Congress should allow the authority for most MA chronic care special needs plans (SNPs) to expire (with certain exceptions) and allow MA plans to enhance benefit designs for individuals with specific chronic or disabling conditions. MedPAC also recommends that Congress permanently reauthorize dual-eligible special needs plans (D–SNPs) that assume clinical and financial responsibility for Medicare and Medicaid benefits (with certain changes) and allow the authority for all other D–SNPs to expire.
There have been many Congressional health policy hearings recently, with more scheduled. Highlights include the following:
- House Ways and Means Committee. Recent hearings have examined traditional Medicare’s benefit design and tax-related provisions in the ACA, and on March 15, the Health Subcommittee is holding a hearing on the Medicare Payment Advisory Commission's annual March Report to the Congress.
- House Energy and Commerce Committee. The Health Subcommittee has reviewed innovative ways to fight health care fraud and abuse, and the panel has scheduled hearings on the impact of the ACA on jobs (March 13) and health insurance premiums (March 15). A March 18 hearing will focus on “Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis.”
- Senate Hearings. The Finance Committee held a hearing on the status of CMS delivery reform efforts. A Health, Education, Labor and Pensions Committee hearing examined animal drug user fees. The Commerce Committee has reviewed transparency in the individual health insurance market. An Aging Committee hearing focused on ways to strengthen Medicare.
MedPAC is meeting on November 1 -2, 2012 to discuss a variety of Medicare policy issues, including: Medicare payment for ambulance services, reducing the hospitalization rate for Medicare beneficiaries receiving home health care, Medicare payment for outpatient therapy services, geographic adjustment of payments for the work of physicians and other health professional, the role of provider prices in determining private-plan Medicare costs relative to fee-for-service Medicare, Medicare Advantage special needs plans, and Medicare payment differences for ambulatory care services across settings.
On September 6 and 7, 2012, MedPAC is meeting to discuss a variety of Medicare issues, including reforming the traditional benefit package, bundling, readmissions, and physical therapy policy. More information, including issue briefs for each of the topics, is available on the MedPAC web site.
MedPAC has released its 2012 Data Book on “Health Care Spending and the Medicare Program.” The publication provides information on national health care and Medicare spending, Medicare and dual-eligible beneficiary demographics, Medicare quality, and Medicare beneficiary and other payer liability. It also includes data regarding various provider types, such as data on Medicare spending, beneficiary utilization of the service, number of providers, volume, length of stay, and Medicare profit margins. The Data Book also covers the Medicare Advantage and Part D drug programs.
On June 15, 2012, MedPAC released its June 2012 Report to the Congress on “Medicare and the Health Care Delivery System.” Unlike most MedPAC reports that focus on provider payments, this report examines the role of beneficiaries and their impact on the Medicare program. In particular, MedPAC recommends reforms to Medicare’s benefit design/cost-sharing structure to protect beneficiaries against high out-of-pocket spending while creating incentives for beneficiaries to make better decisions about discretionary care. The report also assesses different care coordination models, such as bundling and ACOs, and ways to reward outcomes resulting from coordinated care (or penalize fragmented care). In addition, MedPAC examines programs designed to integrate care for Medicare/Medicaid dual-eligible beneficiaries, including the Program of All-Inclusive Care for the Elderly and dual-eligible special needs plan. MedPAC also includes separate chapters on care for beneficiaries in rural areas and options for reforming Medicare coverage of home infusion service, as requested by Congress.
Several Congressional committees have held hearings this month on health policy issues, including the following:
- A House Education and the Workforce Health Subcommittee hearing on “Barriers to Lower Health Care Costs for Workers and Employers.”
- A House Veterans’ Affairs Committee hearing entitled “Through the Looking Glass: Return to Pharmaceutical Prime Vendor Program.”
- House Energy and Commerce Subcommittee hearings on “Examining the Appropriateness of Standards for Medical Imaging and Radiation Therapy Technologists” and “Medicare Contractors’ Efforts to Fight Fraud - Moving Beyond 'Pay and Chase.”
- A House Oversight Subcommittee on Government Organization hearing on “Assessing Medicare and Medicaid Program Integrity.”
- A Senate Aging Committee hearing on “Empowering Patients and Honoring Individual’s Choices: Lessons in Improving Care for Individuals with Advanced Illness.”
- A Senate Homeland Security and Governmental Affairs Committee hearing on "Saving Taxpayer Dollars by Curbing Waste and Fraud in Medicaid.” At the hearing, the OIG reported that neither CMS’s National Medicaid Audit Program nor the Medicare-Medicaid Data Match Program are effectively accomplishing their missions, since both programs had low findings of actual overpayments and actually yielded negative returns on investment, and they delivered very few referrals of potential fraud to OIG and law enforcement.
- On June 19, 2012, the House Ways and Means Health Subcommittee is scheduled to meet to discuss MedPAC’s June report to Congress.
On March 15, 2012, MedPAC released its annual report to Congress on Medicare payment policy. Major recommendations for 2013 are highlighted after the jump.
- Congress should increase acute care hospital inpatient and hospital outpatient payment rates by 1% in 2013; gradually recover past inpatient overpayments due to documentation and coding changes; and gradually reduce outpatient hospital payment rates for evaluation and management office visits to the rate of physician office visits for the same service.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory fee-schedule updates. The proposal, first announced in October 2011, would freeze rates for primary care services for 10 years, while other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC also endorsed budget-neutral changes to improve data on which MPFS relative value unit (RVU) weights are based and to redistribute payments to underpriced services, and made recommendations regarding the structure of accountable care organization shared savings payments.
- Congress should eliminate the 2013 update for skilled nursing facilities (SNFs), and direct the Secretary to revise the SNF payment system to redistribute payments away from intensive therapy care that is unrelated to patient care needs and toward medically complex care. The Secretary also should begin rebasing payments in 2014, with an initial reduction of 4% and additional reductions thereafter to align with providers’ costs. The Secretary also should reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization.
- Congress should eliminate the 2013 market basket update for inpatient rehabilitation facilities and long-term care hospitals, and update the outpatient dialysis payment rate by 1%.
- Congress should update payment rates for ambulatory surgical centers (ASCs) by 0.5% for 2013, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should direct the Secretary to: begin a two-year rebasing of home health rates in 2013; revise the case-mix system to rely on patient characteristics rather than therapy visits; establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use; and expand certain program integrity efforts.
- Congress should increase hospice rates by 0.5% for FY 2013 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
- Congress should modify Part D low-income subsidy copayments for beneficiaries with incomes at or below 135% of poverty to encourage the use of generic drugs when available in selected therapeutic classes (with safeguards to prevent substitutions that are not clinically appropriate).
While MedPAC recommendations are not binding, they are often considered by lawmakers in developing Medicare legislation.
MedPAC is meeting on December 15 and 16, 2011 to discuss payment adequacy of Medicare payment for a variety of provider types, along with ways to encourage the use of lower-cost medications by Medicare Part D low-income subsidy beneficiaries.
The Medicare Payment Advisory Commission (MedPAC) will be meeting November 3-4, 2011 to discuss a number of Medicare policy issues, including: reforming Medicare’s benefit design; Medicare Part D/beneficiaries with high drug spending; coordinating care for dual-eligible beneficiaries through the PACE program; reforming the Medicare SNF PPS; hospitals’ capacity to serve Medicare patients; payment rate differences across ambulatory sectors; and Medicare coverage of and payment for home infusion.
On October 6, 2011, the Medicare Payment Advisory Commission (MedPAC) voted to recommend that Congress repeal and replace the statutory sustainable growth rate (SGR) formula for updating the Medicare physician fee schedule (MPFS). Without legislative action, CMS estimates that the SGR formula would result in an almost 30% MPFS cut in 2012. As discussed in a previous blog posting, the controversial MedPAC plan – which would require Congressional approval -- would freeze current Medicare MPFS rates for primary care services for 10 years, while other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC offered a list of options for Congress to consider if it decides to offset SGR repeal costs (estimated at about $200 billion over 10 years) within the Medicare program. In addition to the SGR proposal, MedPAC endorsed budget-neutral changes to improve data on which MPFS relative value unit (RVU) weights are based and to redistribute payments to underpriced services. MedPAC also recommended that CMS increase the shared savings opportunity for physicians and health professionals who join or lead “two-sided” risk ACOs (where providers can receive bonuses or financial penalties based on performance).
At a recent meeting, the Medicare Payment Advisory Commission (MedPAC) discussed a recommendation to repeal and replace the statutory sustainable growth rate (SGR) formula for updating the Medicare physician fee schedule (MPFS). In recent years, the SGR formula has produced steep cuts in the MPFS update, which Congress has repeatedly blocked through legislation, For 2012, CMS estimates that the SGR formula would result in an almost 30% MPFS cut in the absence of Congressional action. MedPAC is considering an SGR reform proposal that would repeal the SGR and replace it with 10-years of statutory fee schedule updates. The plan would freeze current Medicare payment levels for primary care services, and all other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC also has released a list of potential offsetting Medicare cuts that would raise $235 billion over 10 years to finance the reforms. The proposals include, among others: reduced Medicare payments for many Medicare provider types and services; expanded DMEPOS competitive bidding; various reductions in payments to Medicare Advantage plans; prior authorization for certain imaging services; changes to certain Part D cost sharing; prepayment review of power wheelchairs; drug manufacturer rebates for dual eligibles; bundled payments for hospitals and physicians; payment of hospital outpatient evaluation and management visits at MPFS rates; establishment of least costly alternative authority; expansion of readmissions policies for additional provider types, and validation of physician orders for high cost services.