The Rest of the MedPAC Report to Congress

By March 19, 2020 March 22nd, 2020 Commentary

The Medicare Payment Advisory Commission is charged with reviewing and making recommendations about the adequacy of Medicare reimbursements to providers, and is also from time-to-time asked by Congress to review and report on specific issues.  Its regular reports cover each type of provider.  In this post we summarize the Commission’s finding on payments to those providers.  (link in Tuesday’s post)  The Commission first notes, as it always does, the dire nature of Medicare financing, as the hospital insurance fund will be depleted in 2026 and other portions of Medicare require increasing amounts of taxpayer and beneficiary funding.  Hospitals received $190 billion for inpatient and outpatient services to fee-for-service Medicare in 2018, up over 3% from the prior year even though the number of fee-for-service beneficiaries declined slightly.  Outpatient costs rose over 7%, largely due to payments for Part B drugs.  That problem could easily be fixed by paying the same as is paid in physician offices.  MedPAC says patient access is good, hospitals are generally in acceptable financial shape, they have adequate access to capital and quality of care measures are stable.  MedPAC recommended about a 3% total reimbursement increase for hospital services.  For physician and other clinician services, the report also notes that access is adequate and financial status is good.  The current payment method for physicians calls for no base increase in payments but does allow for “value-based” bonus payments.  The Commission recommended that CMS follow the current law.

In regard to ambulatory surgery centers, MedPAC noted that cost data is not collected, but based on increases in numbers of centers, they appear to be doing fine and recommended no payment increase for next year.  Similarly, the Commission found no problems for dialysis treatment centers and suggested a payment update limited to that required by current law, about 2%.  Post-acute care, which includes skilled nursing facilities and home health care, has historically seen rapid cost growth and concerns about abuse and even fraud.  The Commission has continually recommended reforms of the reimbursement method for post-acute care.  Based on its review, MedPAC suggests Congress eliminate the current payment increase scheduled for skilled nursing homes, and recommended a hefty 7% cut in payments to home health agencies, which currently have very nice profit margins. A rate cut was also suggested for inpatient rehabilitation facilities, along with a modest increase for long-term hospitals.  Hopefully, Congress listens to the Commission and enacts its suggestions in order to facilitate some kind of fiscal solvency for Medicare.

Leave a Reply