The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on “Medicare and the Health Care Delivery System.” This year’s report includes recommendations for changes to emergency department services policies, along with analyses of potential changes that would impact physicians, medical equipment suppliers, post-acute care providers, and others.  Highlights include the following: 

  • The only formal recommendations in this year’s report involve the appropriate access to and use of hospital emergency department (ED) services. MedPAC calls on Congress to:  (1) allow isolated rural stand-alone EDs to bill standard outpatient prospective payment system facility fees; and (2) provide such EDs with annual payments to assist with fixed costs.  Furthermore, MedPAC recommends reducing by 30% Type A ED payment rates (for EDs open 24 hours a day, 7 days a week) for off-campus stand-alone EDs that are within six miles of an on-campus hospital ED.
  • MedPAC describes a budget-neutral approach to rebalancing the Medicare physician fee schedule to increase ambulatory evaluation and management (E&M) services rates while reducing rates for other services (e.g., procedures, imaging, and tests). For instance, MedPAC modeled the impact of a 10% payment rate increase for E&M services, which would cut rates for all other services by 3.8%. 
  • MedPAC examines Medicare payment policies for medical devices. First, MedPAC considers potential expansion of competitive bidding for durable medical equipment, prosthetic devices, prosthetics, orthotics, and supplies.  Second, MedPAC examines physician-owned distributors (PODs) of devices and medical equipment and suggests “ways in which Medicare and policymakers can constrain the risks posed by PODs” (e.g., through revisions to the Stark physician self-referral law and by requiring all PODs to report under the Open Payments program).
  • MedPAC discusses ways Medicare could revise coverage policies to reduce the use of “low-value care,” which MedPAC defines as the provision of a service with little or no clinical benefit or for which the risk of harm outweighs its potential benefit. MedPAC focuses on six tools that Medicare could use:  expanding prior authorization; implementing clinician decision support and provider education; increasing cost sharing for low-value services; establishing new payment models that hold providers accountable for the cost and quality of care; revisiting coverage determinations on an ongoing basis; and linking clinical effectiveness and cost-effectiveness to Medicare coverage and payment policies.
  • The report also includes analyses regarding: the effects of the Hospital Readmissions Reduction Program on beneficiary care and Medicare spending; potential refinements to a unified post-acute care (PAC) prospective payment system to account for sequential stays; approaches to helping hospitals encourage Medicare beneficiaries to use higher-quality PAC providers; principles to measure hospital quality (and application of those principles to population-based outcomes measures and a potential new hospital quality incentives program); the impact of Medicare ACO models on cost and quality; and ways to encourage the development of managed care plans that integrate care dual-eligible individuals.