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MedPAC’s 2016 Report to Congress

By March 28, 2016Commentary

If you follow developments related to Medicare, the Medicare Payment Advisory Commission’s Reports to Congress, including the just-released 2016 version, are must-reads.  (MedPAC Report)   Each of these reports typically covers recommendations in regard to each major provider type covered by the program, as well as Medicare Advantage and some other topics.  This year is somewhat notable in that the Commission is suggesting no payment updates for multiple provider types.  MedPAC says the factors it uses to assess payment adequacy include ensuring adequate access for beneficiaries, quality of care, provider access to capital and provider costs; although it seems that its goal is to have providers make about zero profit on Medicare patients.  In regard to hospitals, the Commission recommended increasing payments for inpatient and outpatient services by the amounts currently set out in the law, but reducing payments for the controversial 340B program drugs by 10%.  It also suggested changing the manner in which uncompensated care funds are distributed to hospitals.  Physician and related professional services and outpatient dialysis centers would also get the payment increase currently scheduled, if the Commission’s advice is heeded.

For ambulatory surgery centers, skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care hospitals, however, the Commission recommends eliminating the current payment updates, basically feeling that they are overpaid.  In addition, the Commission wants ambulatory surgery centers to have to submit cost data, believes skilled nursing facilities should get no payment increase in 2018 and should have the prospective payment system applicable to them revised to better reflect costs of appropriate care.  For home health agencies it was suggested that a rebasing of the payment system should start in 2018 and that the number of therapy visits be removed as a payment factor.  In regard to Medicare Advantage, the Commission noted progress in enrollment and quality and suggested changing certain aspects of how country benchmarks for payments are calculated.  For the never-ending controversy around risk-scoring, the Commission suggest eliminating using diagnoses from health risk assessments and using two years of data.  Part D is Medicare’s drug benefit and the Commission noted the significant 15% increase in drug spending in 2014, due to hepatitis C drugs and generic price rises.

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