Washington Highlights: October 12,
2007
Contents
Prior Issues
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MedPAC Discusses Reducing the Outlier Pool and
Increasing Inpatient Payment Bundles
At its Oct. 3-4 meeting,
the Medicare Payment Advisory Commission (MedPAC) discussed outlier
payment reform in the hospital acute inpatient prospective payment
system (IPPS) and began to look at bundling payments for a broader
array of services. This array would include services that extend
beyond the hospital stay and are administered by separate providers.
MedPAC staff presented analyses to determine the need for maintaining
the outlier pool at its current 5.1 percent of total DRG payment
level. Outlier payments help offset the higher costs associated
with extremely costly cases. Currently, the law requires that the
outlier pool (which is funded by a reduction in the base DRG rate
for all hospitals) be set between 5 and 6 percent of total diagnosis
related groups (DRG) payments. According to MedPAC staff, the need
for this payment level for the outlier pool may have decreased since
the Centers for Medicare and Medicaid Services (CMS) has implemented
refinements of the DRGs, such as the Medicare-severity DRG (MS-DRGs)
system, that are more likely to capture differences in severity
of illness among patients. The monies resulting from a decrease
in the outlier pool would be returned to the DRG base rates. Staff's
impact analyses for various classes of hospitals showed that major
teaching hospitals would lose the most (between 0.1 and 0.5 percent
of total payments). Other teaching hospitals would see no impact
and nonteaching hospitals would gain slightly under the options
studied.
In the discussion following the presentation, several commission
members noted that it is important that outlier payments go only
to those cases that are extremely complex rather than compensating
for hospital inefficiencies or poor performance.
The commissioners also began discussions intended to help MedPAC
staff design a bundled payment system for services provided by both
hospitals and physicians during episodes of care. Staff analyses
indicated that some savings could be achieved by reducing physicians'
services, but a greater amount of savings is more likely to materialize
if hospital readmissions as well as spending on post-acute care
services are reduced. The presentation was followed by the commission's
discussion of the design of the system and included:
- whether to bundle all conditions or start with those that account
for a high percentage of spending;
- whether the episode of care should extend beyond the hospitalization;
and
- how to implement and set payment for the new system.
Overall the Commissioners agreed that aligning hospital and physician
economic incentives can improve coordination of care, which could
lead to better health care outcomes and savings for Medicare. A
few Commissioners expressed the desire to see analyses that show
the amount of regional variation at different levels of unit of
service, before proceeding with further suggestions. Commission
Chair Glenn Hackbarth emphasized that MedPAC is not making definitive
design decisions or making any recommendations at this point.
Building on previous work it has done, MedPAC again focused on
how best to value physician services, particularly physician work
effort. In its March 2006 Report to Congress, MedPAC made several
recommendations regarding valuing physician fee schedule services.
The recommendations included having an expert panel to assist CMS
in identifying services that should be included for review and to
review new services and services with significant volume growth
more frequently. While MedPAC staff presented options to continue
to evaluate the current payment system, the commission focused its
discussion at a macro level. Commissioners inquired if pricing could
be used to address workforce supply and access issues, without being
subject to political manipulation. Chairman Hackbarth summarized
that the commission feels frustrated with the current system and
will evaluate if they can do more than "tinker" with it.
Other issues discussed at the meeting included:
- expanding the unit of payment in the outpatient PPS;
- value based insurance design;
- hospital construction spending trends; and
- Medicare Advantage Special Needs Plans.
Information:
Diana Mayes, Specialist
AAMC Health Care Affairs
dmayes@aamc.org
(202) 828-0498
Mary Patton, Senior Specialist
AAMC Health Care Affairs
mpatton@aamc.org
(202) 862-6297
AHRQ Announces Third Phase of Evidence-based
Practice Center Program
The Agency for Healthcare Research and Quality (AHRQ) Oct. 9 announced
the 14 institutions that will receive 5-year contracts through the
Evidence-based Practice Center (EPC) program. Created in 1997, EPCs
synthesize and analyze scientific literature on health care delivery
issues in an effort to provide a research foundation for evidence-based
health care. The centers will produce reports in 5 focus areas,
including reviews on topics in clinical prevention; assessments
of the clinical utility of medical interventions; comparative effectiveness
reviews through the AHRQ Effective Health Care program; reports
for the AHRQ Generalist Program on a range of clinical, behavioral,
economic, and health care delivery topics; and scientific and methodologic
technical support to the Generalist and Effective Health Care programs.
This third phase includes two new awardees, the University of Connecticut
and Vanderbilt University Medical Center, along with Blue Cross
and Blue Shield Association Technology Evaluation Center; Duke University;
ECRI Institute; Johns Hopkins University; McMaster University; New
England Medical Center Hospitals; Oregon Health & Science University;
RAND Corporation; RTI International; University of Alberta; University
of Minnesota; and University of Ottawa.
Information:
Atul Grover, Director, Government Relations
AAMC Health Care Affairs/Government Relations
agrover@aamc.org
(202) 828-0666
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525
Biosecurity Board Discusses Synthetic Biology
The National Science Advisory Board on Biosecurity (NSABB) and
the National Institutes of Health (NIH) Recombinant DNA Advisory
Committee (RAC) Oct. 11 held a "Roundtable on Synthetic Biology"
to help evaluate the field's potential for "dual use"
research. The roundtable
was led by Howard Federoff, M.D., Ph.D., chair of the NIH RAC and
Executive Dean, Georgetown University School of Medicine; Paul Keim,
Ph.D., Regents Professor of Biology, Northern Arizona University;
and David Relman, M.D., Associate Professor of Medicine and of Microbiology
and Immunology, Stanford University School of Medicine. The meeting
included an overview of synthetic biology, the current ability to
predict biological function from sequence and structure, and the
potential challenges for assessing and managing biosafety risks
from this research.
The NSABB was originally chartered in 2004 within the Department
of Health and Human Services to develop guidelines and advise the
Federal Government on oversight of legitimate biological research
that could potentially be misused to harm society. Both the NSABB
and the RAC, established in 1974 to oversee development of "gene-splicing"
and similar research, are staffed by the NIH's Office of Biotechnology
Activities.
Information:
Stephen Heinig, Lead Science Policy Analyst
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488
On the Hill
Rep. Jo Ann Davis (R-Va.) died Oct. 6, after a 2-year battle with
breast cancer. Gov. Tim Kaine (D) will schedule a special election
to determine a successor for her seat.
Rep. Ralph Regula (R-Ohio) Oct. 12 announced he will retire at
the end of his current term.
Sen. Pete Domenici (R-N.M.) Oct. 4 announced he will retire at
the end of his term in Jan. 2009, citing health concerns. Sen. Domenici
has been diagnosed with Frontotemporal Lobar Degeneration (FTLD).
Sen. Larry Craig (R-Idaho) Oct. 4 announced he will continue to
serve through the end of his term, reversing an earlier statement
in which he indicated he would retire effective Sept. 30. Sen. Craig
also announced he will not seek reelection.
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