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MedPAC Discusses Payment for Hospital Emergency Department Services, Post-Acute Care, and Population-Based Quality Measures

March 5, 2018—The Medicare Payment Advisory Commission (MedPAC) March 1-2 met to discuss Medicare payment issues, including hospital emergency department services, post-acute care, and population-based quality measure among other topics in advance of MedPAC’s June 2018 report.

Hospital Emergency Department (ED) Services Recommendations

Commissioners voted to preserve rural access to ED services with a fixed subsidy to stand-alone EDs (more than 35 miles from another ED) and to allow such EDs to bill outpatient prospective payment system (OPPS) facility rates on a per service basis. Commissioners also voted to align payments for urban off-campus emergency departments (OCEDs, defined as within six miles of an on-campus hospital ED) with the resource needs of providers by reducing Type A hospital outpatient payment rates by a fixed percentage for OCEDs. MedPAC staff noted that while neither recommendation has been formally scored by the Congressional Budget Office, both recommendations are intended to use payment to ensure appropriate access to and use of hospital ED services.

Post-Acute Care

MedPAC staff provided two presentations related to post-acute care (PAC). The first provided analysis on how Commissioners could think about paying for sequential PAC stays in a unified PAC payment system. The second considered options for how Commissioners could recommend Congress could modify current law such to better encourage Medicare beneficiaries towards higher-quality PAC providers. Commissioners reached consensus that more analysis was needed around an option to bundle PAC services under a unified PAC payment system in comparison to developing a payment framework for sequential PAC stays. The Commissioners had a fruitful discussion about a potential framework for maintaining beneficiary freedom of choice while providing more useful information on the quality of PAC providers, but seemed split on whether that framework should be prescriptively set by CMS or allowing more flexibility to post-discharge planners in hospitals. Commissioners agree that currently beneficiaries have an inadequate amount of information, and that they should continue to explore questions and concerns on this topic.

Population-based Quality Measures

MedPAC staff presented an evaluation of two population-based quality measures as part of an overall concept to use a smaller set of outcome measures to evaluate the quality of care for fee for service (FFS) beneficiaries and better be able to compare performance across market areas. The two measures analyzed were potentially preventable hospital admissions and home and community days (HCDs). Staff observed rates of potentially preventable admissions that showed noticeable differences by population groups (age, gender, and Medicaid eligibility) and by market area and hospital service area, but cautioned that the measure still needs additional work to derive risk-adjusted potentially preventable admission rates. For HCDs, staff observed little variance in the number of days in the year that beneficiaries are alive and out of health care institutions, suggesting that as currently conceived, this measure is “topped out.” Commissioners discussed other ideas and concepts related to both measures, notably highlighting the critical importance of risk adjustment for the admissions measure. 

Report on Hospital Readmissions Reduction Program

MedPAC staff provided updated analysis on its mandated report evaluating the effects of the Hospital Readmissions Reduction Program in response to the discussion at the Jan. 2018 meeting. Staff’s observations did not significantly change, and there is evidence to suggest that the program is largely successful and has created an incentive to reduce admissions such that it is at least responsible in part for the observed reduction in admissions since the program came into effect. Potential recommendations would be to consider expanding the program to cover all conditions, to revise the penalty formula, and to go to a fixed target rather than a tournament model so that hospitals know the rate to reach to avoid a penalty.

Cost-Effectiveness Analysis

MedPAC staff presented information on the role of cost-effectiveness analysis in Medicare programs as part of a larger effort to evaluate low-value care. Staff noted that the CMS has previously considered including cost-effective analysis in coverage determinations, but ultimately has never finalized those proposals. Discussion by Commissioners was supportive in continuing evaluating the role of cost-effective analysis, especially as it relates to broader analysis of the clinical effectiveness of Medicare-covered interventions.


Phoebe Ramsey, J.D.
Sr. Regulatory Analyst - Quality and Payment Polic
Telephone: 202-448-6636


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