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  • Washington Highlights

    Ways & Means Health Subcommittee Holds Hearing on Hospital Payment Issues

    Len Marquez, Senior Director, Government Relations

    The House Ways and Means Health Subcommittee held a hearing July 22 focused on hospital payment issues, beneficiary access to care, and payment reform options. Medicare Payment Advisory Commission (MedPAC) Executive Director Mark Miller, Ph.D., testified on MedPAC’s June 2015 Report to the Congress and previous MedPAC recommendations on Inpatient Prospective Payment System (IPPS) “add-on” payments, specifically indirect medical education (IME) and disproportionate share hospital (DSH) payments, short-inpatient hospital stays, and site-neutral payment policy.

    Health Subcommittee Chair Kevin Brady (R-Texas) opened the hearing by praising his colleagues for their part in reforming the sustainable growth rate formula earlier this year and expressing his desire that the committee “carry this progress over into other payment areas.” He specifically mentioned simplifying and better coordinating Medicare inpatient and outpatient payments, saying, “Now we need to take the next step, and that means looking at Medicare’s acute-care payment systems. I want to raise the topic of ‘site-neutral payment’ reforms. This is a policy MedPAC has highlighted for several years now.”

    Chairman Brady questioned Dr. Miller about previous MedPAC work on “site-neutral” payment policy, saying, “I found it striking that MedPAC concluded that Medicare paid roughly $4,240 more on average for an inpatient stay than for a comparable outpatient surgery. This sounds like a good place for Congress to start establishing site-neutral payment. I hope you agree with that.” Miller responded that was an area that MedPAC has begun to examine.

    Turning to Dr. Miller’s testimony on Medicare graduate medical education (GME), Rep. Joe Crowley (D-N.Y.) reminded the subcommittee of the shared responsibility between teaching hospitals and the federal government in training the physician workforce, stating “the teaching hospital may be the one receiving the payment to offset a portion of their costs, but it is the whole country who benefits from more well-trained doctors.”

    Crowley stressed the importance of GME funding to teaching hospitals’ unique community missions, explaining, “Part of that investment is also in the highly-complex and costly patient care missions that teaching hospitals undertake. They run advanced trauma centers and burn units, they see more complex patient cases, they treat patients with rare and difficult diseases like Ebola. And that helps train future doctors in all those areas…Graduate medical education payments were designed by Congress to reflect all these undertakings, beyond just the explicit costs you may see on paper.”

    Dr. Miller explained MedPAC’s June 2010 GME recommendation to redirect a portion of Medicare IME payments by explaining “you take the dollars that exist, you allocate them differently, and you target them to hospitals and other providers who are running GME programs that are more comprehensive in team-based care, evidenced-based medicine, and also alternative sites of care where they’re trained, in addition to the hospital.” He added, “We didn’t talk about eliminating the dollars.”

    Crowley closed by saying, “I think you appreciate the teaching of a modern doctor today…I believe we need a stronger investment in graduate medical education, like raising the outdated cap on the number of residents that Medicare supports.” He then urged his colleagues to support his bipartisan legislation, The Resident Physician Shortage Reduction Act of 2015 (H.R. 2124), introduced with Rep. Charles Boustany, M.D. (R-La.), as a starting point to address these concerns.

    Several subcommittee members raised concerns with the Hospital Readmission Reduction Program (HRRP), which was established through the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) and aimed at reducing unnecessary hospital readmissions. Rep. Jim Renacci (R-Ohio) specifically focused on the problematic implementation of the program, particularly for hospitals serving a disproportionate share of low-income patients, and the correlation between these hospitals, low-income patients, and readmission penalties. Rep. Renacci then highlighted his bipartisan legislation, The Establishing Beneficiary Equity in the Hospital Readmission Reduction Program (H.R. 1343), which would risk-adjust the HRRP for patients’ socioeconomic status when calculating hospital readmissions as a legislative solution.