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MedPAC Explores Options for Bundling of Post-acute Care Services

March 9, 2012—The Medicare Payment Advisory Commission (MedPAC) March 8 discussed options for the bundling of payment for post-acute care (PAC) services. PAC services are provided to beneficiaries after discharge from an inpatient setting.  MedPAC staff noted that PAC services account for approximately 10 percent of total Medicare expenditures, and bundling has the potential to lower program spending through encouraging more efficient use of resources and coordination across providers. 

MedPAC staff presented data that indicated PAC spending varies significantly by geographic setting and within specific clinical conditions, such as heart failure.   Commission staff offered several PAC payment bundle designs, including combining hospital and PAC services into one bundle, or having separate bundles for hospital services and PAC services.  In the case of separate bundles, the commission discussed whether or not to include hospital readmissions in the payment bundle, and if so, whether the hospital or PAC entity should be at risk for the readmission.  The commission also discussed the bundling demonstration programs currently being developed by the Centers for Medicare and Medicaid Innovation (CMMI).  

Commissioners, while generally supportive of bundling as a concept, had concerns with how difficult it would be to design and operationalize bundling programs on a nationwide scale.  MedPAC Executive Director Mark Miller, Ph.D., noted that the development of an appropriate risk adjustment methodology continues to be a barrier and needs to be refined.  Commissioner Peter Butler, executive vice president and chief operating officer of Rush University Medical Center, commented on the need to exclude special Medicare payments such as Indirect Medical Education (IME) and Disproportionate Share Hospital (DSH) payments when designing a risk adjustment methodology.

During the public comment period, AAMC Chief Healthcare Officer Joanne Conroy, M.D., expressed appreciation to the commission for recognizing that IME and DSH payments must be considered separately when developing bundles. Dr. Conroy also shared insights from AAMC analysis on bundling that indicates factors such as transfer patients and social determinates of health increase patient complexity and should be considered when developing an accurate risk adjustment methodology.  Dr. Conroy noted that to mitigate risk to providers, it is important to define the services that are included and excluded in a bundle.The AAMC has applied to serve as a facilitator/convener in the CMMI Bundling Initiative.

Other topics discussed by the commission during the March 8-9 meeting included care coordination in fee-for-service Medicare, coordination of dual-eligibles, and Medicare benefit design.  The next public meeting of MedPAC will be held on April 5-6.

The presentation slides for all of the sessions and a transcript of the meeting will be available on the MedPAC website.


Will Dardani
Clinical Policy and Practice Specialist
Telephone: 202-828-0541


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