July 23, 2014

Medicare Payment Advisory Commission (MedPAC) Releases June Report

On Friday, June 14, 2013, the Medicare Payment Advisory Commission (MedPAC) released its June report to Congress, focusing on a number of policies related to Medicare and delivery system reform, as well as three Congressionally-mandated reports.  In March 2013, MedPAC released its annual report discussing annual Medicare payment policy recommendations.  More information on the March report is available here.

MedPAC reports are noteworthy because Congress often looks to MedPAC analysis to determine changes in Medicare payment policies.  For example, the hospital readmissions reduction program, which was included in the ACA, was originally proposed by MedPAC.  A few highlights of the June report include:

  • Chapter 1 provides a discussion of key issues to consider if Congress were to change Medicare into a competitively determined planned contributions (CPC) model.  Under such a policy, Medicare payment would be based on competition between private plans and traditional fee-for-service Medicare; beneficiaries’ premiums would vary depending on the coverage they choose.

  • In Chapter 2, MedPAC expanded its discussion of equalizing payment rates across practice settings with a chapter on payment differences across ambulatory settings.  In its March 2012 report, MedPAC recommended equalizing payment rates for evaluation and management codes regardless of practice setting.

  • In Chapter 3, MedPAC discussed further expanding Medicare’s bundled payment policies to include post-acute care services.  MedPAC has been increasingly interested in bundled payments as a way to better ensure care coordination across practice settings.

  • In Chapter 4, MedPAC discussed how to improve the current Medicare hospital readmissions reduction program.  Currently, Medicare penalizes hospitals if beneficiaries with certain conditions are readmitted to the hospital within 30 days of discharge.  MedPAC’s chapter offers alternatives to address some of the unintended consequences resulting in the current hospital readmissions reduction program policies.

  • Chapter 5 focuses on changes to the hospice payment system, including a discussion of the appropriateness of admission of beneficiaries to hospice (MedPAC analysis showed that 18 percent of hospice patients were alive at the point of discharge from hospice).  MedPAC also discussed the overlap of hospice care provided to beneficiaries residing in nursing facilities.

  • Chapter 6 focused on how best to improve the quality of care for beneficiaries who are dually eligible for the Medicare and Medicaid programs (the so-called “dual eligibles”).

A fact sheet on the policies contained in these chapters is available here.  In addition, as part of the Middle Class Tax Relief Act of 2012, Congress mandated MedPAC to issue three reports.

  • MedPAC examined the temporary add-on payments to the ambulance fee schedule and recommended that these payments be allowed to expire.  MedPAC also recommended that HHS better define the medical necessity requirements for Medicare coverage of ground transportation services.

  • MedPAC examined whether a geographic adjustment for labor rates should be included in the Medicare physician fee schedule.  Parts of the physician fee schedule currently include a geographic component, though some believe those adjustments do not go far enough to capture the geographic variations that exist throughout the Medicare program.

  • Finally, MedPAC examined the current outpatient therapy services provided under Part B and suggested changes to improve the current payment system.  MedPAC expressed concern with the current outpatient therapy caps (for both occupational therapy services and a combination of physical therapy and speech-language pathology services).  MedPAC recommended policies intended to reduce inappropriateness of outpatient services and improve the data on outpatient therapy services provided to beneficiaries.

A fact sheet on these three Congressionally-mandated recommendations is available here.

©2014 Drinker Biddle & Reath LLP. All Rights Reserved

About the Author

Medicare Reimbursement and Health Policy Director

Anna Schwamlein Howard is the Medicare Reimbursement & Health Policy Director in the firm’s Health Government Relations team.

A nationally recognized authority on health care reform issues, Anna has considerable experience in government relations and regulatory affairs. Specifically, she has extensive knowledge with the Medicare Modernization Act, medical privacy and prescription drug issues, Medicare physician payment legislation, the Affordable Care Act, and other federal health issues impacting the lives of older Americans.

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