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  • Washington Highlights

    MedPAC Releases March 2016 Report to Congress

    Len Marquez, Senior Director, Government Relations

    The Medicare Payment Advisory Commission (MedPAC) March 15 released its March 2016 Report to Congress, which includes recommended annual adjustments for Medicare’s various payment systems.

    For inpatient and outpatient hospital services, the Commission recommends that the payment be increased as specified in current law (1.75 percent), concurrent with reductions to the payment rate for Part B drugs at 340B hospitals. MedPAC conducted various fee-for-service (FFS) payment analyses and also recommends no payment update for 2017 for four FFS payment systems including ambulatory surgical centers (ASCs), long-term care hospitals, inpatient rehabilitation facilities, and hospice. Furthermore, MedPAC recommends that payments for physicians and other health professionals be updated by the amount specified in current law (.5 percent).

    MedPAC recommends that Medicare pays 10 percent of the average sales price to 340B prospective payment system hospitals for part B drugs. It would result in reduced beneficiary cost sharing and reduce overall program spending for Part B drugs by approximately $300 million. MedPAC is concerned that 340B hospitals receive a substantially higher amount from Medicare since Medicare does not account for the discounts in drug pricing that 340B hospitals receive for providing uncompensated care.

    Additionally, MedPAC continues to make recommendations for FFS payments to ensure that high-quality care is delivered to Medicare beneficiaries in a cost-effective manner. The Commission’s payment rate recommendations are based on assessments of payment adequacy that examines beneficiaries’ access to and use of care, the quality of care they receive, supply of providers, and provider’s costs and Medicare’s payments. While the Commission does not recommend any payment updates for 2017 for the four FFS payment systems, they encourage Medicare to require ASCs to submit cost data.

    Specifically, regarding Inpatient Rehab Facilities (IRF), MedPAC recommends that the Secretary of Health and Human Services analyze IRF coding to determine whether it accurately reflects the rehabilitation needs of patients. The Commission is concerned that the patient selection and assessment and coding practices may contribute to differences in costs and profitability across the providers.

    Finally, the report also includes various recommendations regarding the Medicare Advantage and Part D program.