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  • Washington Highlights

    MedPAC Releases March 2015 Report to Congress

    Len Marquez, Senior Director, Government Relations

    The Medicare Payment Advisory Commission (MedPAC) March 13 released its March 2015 Report to Congress, which includes recommended annual rate adjustments for Medicare’s various fee-for-service (FFS) payment systems.

    MedPAC again recommends a 3.25 percent update to payment rates for acute care hospital inpatient and outpatient hospitals, concurrent with two previously recommended changes that would implement site neutral payments between settings in 2016.

    MedPAC recommends reducing hospital payments for 66 ambulatory payment classifications (APCs), mainly for imaging and tests, to make payments for these services more similar to the rates paid in the physician fee schedule. The commission also recommends paying long-term care hospitals (LTCHs) a rate equivalent to what an acute care hospital would otherwise be paid to care for a patient, unless the patient’s illness could be characterized as chronically critically ill (CCI). Reductions in spending derived from paying LTCHs a lower rate for non-CCI patients could be used to fund an outlier pool for acute care hospitals that treat CCI patients. This change would be phased in over a three-year period (2016 - 2018).

    The report includes another site-neutral recommendation to eliminate the differences in payment between inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNF) for selected conditions. These reductions to inpatient rehabilitation hospital payments are also to be phased in over three years. As part of this recommendation, IRFs would receive relief from regulations specifying the intensity and mix of services for site-neutral conditions.

    Consistent with the March 2014 Report, MedPAC recommends that the following FFS payment systems not receive a payment update in 2016: ambulatory surgical centers, outpatient dialysis, long term care hospitals, inpatient rehabilitation facilities, and hospice and home health services. For skilled nursing facilities (SNFs), MedPAC recommends refraining from updating payments while a revised PPS is implemented, and begin rebasing a year after starting with an initial four percent reduction in payments.

    For physician services, MedPAC reiterates its previous recommendation to repeal the sustainable growth rate (SGR) formula and replace it with a 10-year path of statutory fee schedule updates. The path would include a payment rate update that is higher for primary care services than for specialty services to decrease the differential between primary care payments and payments to specialists. Additionally, as part of the path, the report states that Congress should direct the Secretary of Health and Human Services (HHS) to increase the shared savings opportunity for physicians and health professionals who join or lead two-sided risk accountable care organizations (ACOs).

    The commission also recommends establishing a per beneficiary payment to replace the Primary Care Incentive Payment program (PCIP) when it expires at the end of 2015. The per beneficiary payment would be based on the average per beneficiary payment under PCIP and would be exempt from beneficiary cost sharing. MedPAC recommends that funding for the per beneficiary payment should come from reduced fees for all other services in the fee schedule and should protect PCIP-defined primary care services irrespective of the practitioners furnishing the services.

    The report also includes a prior recommendation for a three-year data collection from a cohort of efficient practices, including information on service volume and work time, to establish more accurate work and practice expense values. The goals of the data collection would be to assess the adequacy of Medicare’s fees for efficient care delivery and to help identify overpriced fee-schedule services and reduce their relative value units (RVUs). According to MedPAC, these reductions should be budget neutral within the fee schedule and should annually account for 1 percent of fee-schedule spending for five consecutive years starting in 2015.