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MedPAC Discusses IME Payment Policy and Other Medicare Policy Topics

September 6, 2019

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PRESS CONTACTS
Ivy Baer, Senior Director and Regulatory Counsel
Phoebe Ramsey, Sr. Regulatory Analyst, Quality & Payment Policy

The Medicare Payment Advisory Commission (MedPAC) met September 5-6 to kick off a new working year for the Commission. The Commissioners discussed Medicare’s Indirect Medical Education (IME) payment policy, evaluating the Hospital Readmission Reduction Program (HRRP), and approaches to designing a value-incentive program for post-acute care (PAC) providers among other topics.

Current Medicare IME Payment Policy, Concerns, and Consideration for Revising

MedPAC staff presented an overview of current IME payments to teaching hospitals that are calculated as a percentage add-on to inpatient Medicare payments. They then provided background on prior policy discussions on how to allocate IME payments in consideration of the shift of patient care from inpatient toward outpatient settings. Staff discussed the possible reallocation to make IME payments available for both inpatient and outpatient settings and the addition of a performance-based pool. While the MedPAC proposal would not reduce total IME payments, MedPAC staff did not analyze the impact of the proposals on the impact on specific teaching hospitals, such as those that are major teaching hospitals. Some Commissioners expressed a desire for a broader discussion of Medicare payment for medical education, while others wondered how IME could be leveraged to impact the training of specialties most needed by Medicare beneficiaries.

Several Commissioners expressed concern about the performance-based component due to lack of clarity regarding how this would be measured and the complexity that would be added to the payment system. Overall, Commissioners expressed a need to better understand the impacts of any shift of IME funding on individual teaching hospitals that could be sensitive to operating margins and beneficiary access to care at academic medical centers. Staff will do more work in the future.

Updated Evaluation of the Hospital Readmission Reduction Program

MedPAC staff presented an update on its June 2018 Report to Congress, which included a mandated evaluation of Medicare’s Hospital Readmission Reduction Program. In that previous report, MedPAC concluded that the HRRP has been successful in reducing readmissions without an adverse effect on beneficiary mortality. MedPAC staff has since updated this evaluation to include 2017 readmission rates, and in the course of doing so discovered an error in prior calculations that resulted in an understatement of readmission rates in 2016. This correction showed that the decline in readmission rates through 2016 is smaller than initially reported, but that the Commission’s findings remain consistent with earlier results that the policy behind the HRRP has been successful without adverse impacts. Commissioner discussion demonstrated continued support for measuring readmissions, in addition to confirming support for the Hospital Value Inceptive Program (HVIP) recommendation from the March 2019 report as the next generation of hospital quality measurement [see Washington Highlights, March 22].

A Value Incentive Program (VIP) for PAC Providers

Commissioners have previously discussed a unified payment system for all PAC and have sought to create a policy design to allow for comparisons of patient outcomes and the quality of care across PAC settings. MedPAC staff presented an illustrative design of a PAC-VIP consistent with the Commission’s principles for quality measurement and the HVIP concept. One thread of Commissioner discussion focused on whether greater analysis is needed on the challenges with the inclusion of home health in a unified PAC quality program as compared to the other institutional PAC settings.

Another area of focus was concern that in order to meet reliability thresholds in measurement across each of the settings, MedPAC staff used three years of data, which could prevent higher volume PAC providers from ability to move performance meaningfully. Finally, Commissioners expressed support for more proactive work to develop more refined measure capability of social determinants of health.

Other topics discussed included an overview and contextual setting of Medicare payment policy, Medicare Advantage (MA)’s effects on fee-for-service (FFS) spending and coding, and an examination of the effects of competitive bidding for diabetes testing supplies and improving payment policies of DMEPOS products excluded from competitive bidding.

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