The Medicare Payment Advisory Commission gives Congress an annual report with its perspective on the status of the program and recommendations for changes. (MedPAC Report) This year’s report identifies ten issues that MedPAC believes Congress should address or that it was required to report on. The first related to Medicare’s readmission penalty program. MedPAC concludes that the program has reduced readmissions and has not created more observation stays or greater use of the ER. The next issue related to maintaining emergency services in rural areas. Currently Medicare will only pay for an emergency department if the facility has inpatient beds. Many rural hospitals have few inpatient admissions. So MedPAC recommended decoupling the two and allowing outpatient-only rural hospitals to deliver ER services. Conversely, in urban areas health systems have been allowed to set up stand-alone ERs, which are probably overpaid and encourage overuse, so MedPAC believes payments to these facilities should be reduced. The third area is evaluation and management fees to physicians, which MedPAC believes are too low, while more procedural payments are too high. This likely causes physicians to deliver too little primary and preventive care and too many procedures, so MedPAC recommends raising E & M fees and lowering procedural ones. The fourth item was consideration of tweaking the proposed unified system for post-acute care payments to address sequential stays in different settings. MedPAC recommends consideration of an episode-based payment to address this and other post-acute care reimbursement issues. The fifth issue was how to encourage more use of high-quality post-acute care providers. There is apparently wide variation in quality among these providers. Consumers tend to prefer ones near their homes. CMS has not finalized a program for providing quality information to beneficiaries. MedPAC emphasized balancing consumer choice with ensuring they understand quality measures and differences and potentially allowing hospital discharge planners to make recommendations based on quality performance. More tomorrow.