Skip to Content

Filter by:

Washington Highlights

MedPAC Makes Recommendations on HOPDs, Readmissions Reduction Program, and GPCI

June 21, 2013—The Medicare Payment Advisory Commission (MedPAC) June 14 released its June 2013 Report to the Congress: Medicare and the Health Care Delivery System.The report discusses Medicare benefit design, payment differences across ambulatory settings, bundling post-acute care (PAC) services, the Medicare Readmissions Reduction Program, hospice payment, and care for dual eligibles.  In addition, the report contains congressionally mandated reports on Medicare ambulance add-on payments, physician geographic payment adjustment, and payment for outpatient therapy services.

Building on 2012 recommendations regarding payment reductions for certain evaluation and management (E&M) services [see Washington Highlights, March 23, 2012], MedPAC examined ambulatory services frequently performed in freestanding offices or ambulatory surgical centers (ASCs) that receive higher Medicare payments when performed in hospital outpatient departments (HOPDs).

The report explores a number of options for reducing variations in payments across settings, but does not recommend payment changes at this time.  MedPAC previously discussed HOPD payments in multiple public meetings [see Washington Highlights, March 8 and Oct. 5, 2012].

In the report, the commission identifies 66 groups of services that are frequently performed in both HOPDs and physicians’ offices, and in which patient severity in HOPDs is no greater than that in physicians’ offices.  Three of these 66 groups of services include cardiac imaging services.  MedPAC also identifies 12 groups of services for which the HOPD payment rates could be reduced to the ASC level.  Lastly, the commission considers a stop-loss policy that would limit the loss of Medicare revenue for hospitals that provide services to a disproportionate share of low-income patients, who may be more likely to seek care in HOPDs.

The report also discusses the Medicare Readmissions Reduction Program. Authorized under the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152), the program levies penalties on hospitals with excess readmissions starting October 2012. Readmissions are measured for three conditions — acute myocardial infarction, pneumonia, and heart failure — but the number of conditions will expand in future years.  Specifically, the report seeks to discuss ways to refine the current policy.

MedPAC considers four refinements to the current policy, though any actions would require legislative changes.  The four considerations are as follows:

  • Set a fixed target for readmission rates and penalties that would go down when industry performance improves;
  • Use an all-condition readmission measure to increase the number of observations and reduce random variation;
  • Use an all-condition readmission measure to limit the concerns regarding the inverse relationship between heart failure mortality rates and readmission rates; and
  • Evaluate hospital readmission rates against a group of peers with a similar share of poor Medicare beneficiaries as a way to adjust for socioeconomic status. 

The report also presents the findings of a congressionally mandated report on the geographic adjustment of payments for the work of physicians and other health professionals.  Findings in the report show there is evidence of a need for some level of geographic adjustment of payments for professional work, but also that the current geographic practice cost index (GPCI) is flawed. 

MedPAC recommends [see Washington Highlights, Oct. 5, 2012] that Congress should allow the current GPCI floor to expire per current law, and, because of uncertainly in the data, should adjust payments by the current one-quarter GPCI while also directing the Secretary of Health and Human Services to develop a new adjuster to replace it. 

The next MedPAC public meeting will be held Sept. 12-13. 


Jane Eilbacher
Policy and Regulatory Specialist
Telephone: 202-828-0896

Mary Patton Wheatley, M.S.
Director, Health Care Affairs
Telephone: 202-862-6297


envelope on a green background

Subscribe to Washington Highlights

RSS icon

Subscribe to RSS

Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

Past Issues

For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806