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  • Washington Highlights

    MedPAC Discusses Medicare Payment Adequacy of Physician and Hospital Services

    Len Marquez, Senior Director, Government Relations

    The Medicare Payment Advisory Commission (MedPAC) Dec. 8-9 held a meeting to discuss payment adequacy and to vote on draft recommendations for payment updates in 2018 for a range of payment systems.

    MedPAC staff discussed payment adequacy and updating payments for hospital inpatient and outpatient services, and found that utilization of both inpatient and outpatient hospital services increased in 2015. Margins are expected to decline in 2017 due to reductions in uncompensated care payments and penalties under the meaningful use program. Commissioners supported a draft recommendation to update by 1.85 percent the inpatient and outpatient payments after reviewing studies that found beneficiaries and providers have adequate access to care and providers, respectively.

    Commissioners also supported the Chairman’s draft recommendation that the Secretary of Health and Human Services (HHS) require hospitals to add a modifier on claims for all services provided in off-campus stand-alone emergency departments (EDs). MedPAC staff found that Medicare beneficiaries’ access to care is comparable to that of privately-insured individuals. However, Commission staff noted that there has been a decline in rates of both Medicare beneficiaries and privately-insured individuals reporting that they obtain regular or routine care.

    The Commissioners approved a draft recommendation to update the physician fee schedule by 0.5 percent for 2018, which is the amount specified by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). For ambulatory surgical center services (ASCs), the Commissioners recommended that there be no update for 2018 and that the ASCs be required to submit cost data to the Centers for Medicare and Medicaid Services (CMS). Additionally, MedPAC staff concluded that payments for outpatient dialysis services are adequate, finding that access to care is sufficient and dialysis facilities have an incentive to treat Medicare beneficiaries. Commissioners unanimously supported the Chairman’s recommendation that Congress increase the outpatient dialysis base payment rate by the 1 percent update for 2018.

    Moving forward, MedPAC staff indicated that they will focus on options to better support primary care, grouping Current Procedural Terminology (CPT) codes into families of codes, MACRA, and alternative payment models.

    MedPAC’s next meeting will be Jan. 12-13, 2017.