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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

MedPAC Discusses Payment for Hospital Emergency Department Services, Hospital Quality Measurement, and Issues for Medicare Accountable Care Organizations

April 13, 2018—The Medicare Payment Advisory Commission (MedPAC) Apr. 5-6 met to discuss Medicare payment issues, including hospital emergency department services, hospital quality reporting programs, and issues confronting Medicare ACOs among other topics in advance of MedPAC’s June 2018 report.

Hospital Emergency Department (ED) Services Recommendations

Commissioners voted in support of reducing reimbursement for certain urban standalone off-campus emergency departments (OCEDs). They unanimously recommended that Congress reduce payments to these facilities that are within six miles of an on-campus hospital emergency department by 30 percent, which would reduce annual spending by between $50 million and $250 million.

Urban OCEDs that are located more than six miles from an on-campus emergency department would see no reduction. The commissioners also recommended that rural OCEDs located more than 35 miles from another emergency department be permitted to bill standard outpatient prospective payment system (PPS) facility fees. MedPAC has had concerns with the increased development of these stand-alone emergency departments, as use of emergency services by Medicare beneficiaries has increased in recent years. During the discussion, commissioners expressed concern with the focus on emergency services and payment, stating greater focus should be on increasing access to primary care services. While both votes were unanimous, many commissioners expressed concern about the urban OCED recommendation, noting that they hope this will not be the end of the conversation on this topic, and that the recommendation is a good starting point.

New Ideas for Hospital Quality Incentives

MedPAC staff presented for discussion a proposed hospital value incentive program (HVIP) design that would seek to consolidate hospital quality reporting programs by merging the Hospital Readmissions Reduction Program (HRRP) and Hospital Value-Based Purchasing (VBP) Program and eliminating the Inpatient Quality Reporting Program (IQR) and Hospital-Acquired Condition Reduction Program (HACRP).

The proposed HVIP design would score performance across four outcomes, patient experience and value measures (readmissions, mortality, spending, and overall patient experience) with absolute prospective performance targets. They propose to account for social risk factors by directly adjusting payment through a peer grouping approach (modeled based off 10 groups, based on full-benefit dual eligible patients as a percentage of overall Medicare patients).

The Centers for Medicare and Medicaid Services (CMS) would continue to publicly report hospital performance on a site like Hospital Compare, though there was no mention of whether CMS should continue its Star Ratings program. Commissioners expressed support for the simplicity of one hospital reporting program with prospectively set targets, though some had concerns about the clinical meaningfulness of an overall patient experience measure and the lack of inclusion of harm measures in HVIP scoring (though MedPAC staff noted that hospitals would continue to report on infection rates and the like to the Centers for Disease Control and patient safety measures for public reporting purposes). This proposal is still at the discussion stage, and commissioners have not yet discussed any recommendations around the HVIP concept.

Long-term Issues Impacting Medicare ACOs

MedPAC staff presented an update to commissioners on Medicare Accountable Care Organizations (ACOs) leading to a thoughtful discussion on policy ideas to explore further, including restructuring the Advanced-Alternative Payment Model (A-APM) incentive payments to clinicians participating in Medicare ACOs with two-sided risk, whether they can align incentives for hospitals to engage with Medicare ACOs, and whether Medicare should continue asymmetric risk models.

Overall, commissioners discussed support for Medicare ACOs and their opportunity to bring value to traditional Medicare fee for service (FFS), some going so far as to suggest further research and discussion about mandatory ACO participation as a possible future for the FFS program. Others threads focused on engaging FFS beneficiaries in the work of the ACO, similar to how Medicare Advantage (MA) plans can offer additional benefits to plan enrollees, and the future of ACO benchmarking to ensure that ACOs who achieve and maintain efficiency and high quality remain incentivized under Medicare ACO programs.

Uniform Outcome Quality Measures for Post-Acute Care (PAC)

MedPAC staff presented findings on the development of potential cross-cutting measures that could be used in a future value-based purchasing policy for all post-acute care (PAC) providers: readmissions during the PAC stay, readmissions during the 30 days following discharge from the PAC stay, and resource use. Commissioners were pleased to see a uniform site-neutral quality measurement concept that could be coupled with a potential uniform PAC prospective payment system (PPS).

There was some discussion around fine-tuning a resource-based measure, due to concern that the readmission measures would suffice under a uniform PAC PPS. Similarly, commissioners discussed whether truly site-neutral PAC readmission measures was possible considering varying intensity of stays across PAC providers.

Medicare Advantage Encounter Data

Commissioners also discussed the need for encounter data from the Medicare Advantage (MA) program, highlighting challenges with accessing the data and reiterating its importance. MedPAC staff outlined challenges with MA encounter data, stating that plans are often not submitting – or the system is not accepting – encounters for all settings. Only 80 percent of MA contracts had submitted encounter data for all of their settings, but there are also challenges within the CMS reporting system. During the discussion, commissioners noted that perhaps using MA encounter data to inform plans' bids, one of the potential recommendations presented by staff, could be an effective way to ensure encounter data is submitted. Commissioners discussed the need for stronger penalties and enforcement of this submission requirement.

Contact:

Kate Ogden
Physician Payment & Quality Specialist
Telephone: 202-540-5413
Email: kogden@aamc.org

Phoebe Ramsey, J.D.
Sr. Regulatory Analyst - Quality & Payment Policy
Telephone: 202-448-6636
Email: pramsey@aamc.org

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


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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org