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From Health Law Daily, March 16, 2015

MedPAC recommends Medicare reform in 2015 report to Congress

By Bryant Storm, J.D.

Annual Medicare fee-for-service (FFS) rate adjustment recommendations designed to lower costs and improve beneficiary care were the focus of the Medicare Payment Advisory Commission’s (MedPAC) annual report to Congress on Medicare payment policy. The MedPAC report makes recommendations to improve outpatient facilities, inpatient facilities, skilled nursing facilities, and home health agencies through reforms including lowered base rates, the implementation of quality incentives, and the coordination of payment for similar services across different facilities. MedPAC also recommended that Congress repeal the sustainable growth rate system (SGR) for physician payments. The recommendations are designed to further the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) push to reevaluate the FFS system drawbacks of rewarding quantity rather than quality of health care services. The report also reviewed the status of the Medicare Advantage (MA) and Medicare Part D programs.

FFS. MedPAC recommended that Congress eliminate the updates to the FFS payment systems for ambulatory surgical centers, outpatient dialysis, long term care hospitals, inpatient rehabilitation facilities, and hospice. Regarding inpatient and outpatient hospitals, MedPAC suggested that Congress reduce or eliminate the differences in payment rates between outpatient departments and physician offices for certain ambulatory services. For home health agencies, MedPAC recommended that Congress eliminate therapy visits as a payment factor and instead rely on patient characteristics to set payment for therapy and nontherapy services. The report also suggested payment reductions for home health agencies with high risk-adjusted rates of hospital readmission. The proposal to have Congress repeal the SGR was coupled with the suggestion to “replace it with a 10-year path of statutory fee-schedule updates” and include greater shared savings opportunities for accountable care organizations (ACOs).

MA. The report included several findings regarding the status of the MA program, including the fact that in 2013 MA enrollment increased by 9 percent to 16 million beneficiaries, leaving MA representing 30 percent of all Medicare beneficiaries. Additionally, in 2015, 99 percent of Medicare beneficiaries have access to an MA plan. The quality measures used to evaluate MA plans through the star rating system remained relatively unchanged, which MedPAC attributed to higher thresholds for a four star rating. MA plans also saw a decline in performance on mental health measures, although those measures do not factor into the MA plan star rating system.

Part D. In 2014, 37 million beneficiaries, or 69 percent of Medicare beneficiaries, were enrolled in Part D plans. Another 5 percent received prescription drug coverage through an employer-sponsored plan that received Medicare retiree drug subsidies. About 62 percent of Part D beneficiaries receive their benefit through stand-alone prescription drug plans (PDPs) while the remaining beneficiaries are in MA-PDPs. The number of companies offering Part D has also been consolidated. For example, in 2007, the top nine insurers accounted for 60 percent of enrollment, whereas the same nine insurers now account for 80 percent of total enrollment. Additionally, while the use of generic drugs has increased from 61 percent in 2007 to 81 percent in 2012, the MedPAC report indicates that an increased share of spending will result from significant rises in prices for single-source brand name drugs and specialty drugs.

MainStory: TopStory ReimbursementNews CMSNews PartANews PartBNews PartCNews PartDNews HomeNews SNFNews LTCHNews HospiceNews IRFNews PhysicianNews OPPSNews ProgramIntegrityNews IPPSNews ACONews QualityNews

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