MedPAC Submits Annual Recommendations to Congress: What It Means for You
The Medicare Payment Advisory Commission, otherwise known as MedPAC, is the independent commission charged by law to annually review the Centers for Medicare & Medicaid’s (CMS) Medicare payment policies and then make recommendations to control costs under the system. In March, MedPAC sent its annual report to Congress with recommendations that would considerably affect physician and other health professional services, Ambulatory Surgical Center Services (ASCs), hospital inpatient and outpatient services, and more. To keep members apprised of any important communication exchanged between MedPAC and Congress, the Health Policy team not only regularly attends MedPAC meetings, but also reviews the Commission’s two annual reports. Below is a brief summary of the key provisions from this year’s report that are relevant to otolaryngology-head and neck surgery. Background One of the main responsibilities of MedPAC is to make payment update recommendations for providers paid under FFS Medicare. An update refers to the percentage change by which the base payment rate is changed from one year to the next. Base payment rates are the payments for all providers in a payment system. The update is determined by looking at a variety of factors, including adequacy of payments to providers in the current year, beneficiaries’ access to care, quality of care provided, providers’ access to capital, and associated costs for both Medicare and providers. In addition, MedPAC looks at what features are likely to change in the coming year (i.e., the year the update will take place). Further, consideration of other influences is also factored into the equation, with MedPAC then determining whether or not a recommended increase, decrease or no change in payment is warranted. The relevance to you is that “these update recommendations, if enacted, could significantly change the revenues providers receive from Medicare.” (Report to the Congress: Medicare Payment Policy. March 2014:xiii.) This year, MedPAC made recommendations affecting several FFS settings, some of which included hospital inpatient and outpatient services, physicians and other health professionals, and ASCs. Hospital Inpatient and Outpatient Services A host of changes were recommended for hospital payment systems for 2015 in an effort to reduce perceived excessive payment rates and create equity among various settings. According to MedPAC, Medicare typically pays more for services performed in hospital outpatient departments (HOPDs), even though such services are often performed in the physician office setting. This discrepancy is viewed as creating an incentive for hospitals to purchase physician offices and convert them to HOPDs, thus receiving nearly double the payment despite no real difference in location and patient mix. To limit this distortion, and address other concerns, MedPAC made the following recommendations: Differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications should be reduced or eliminated. Long-term care hospital (LTCH) base payment rates should be set from non-chronically ill (CCI) cases to those of acute care hospitals (ACHs), the savings from which should be redistributed to create additional inpatient outlier payments for CCI. Payment rates for ACHs’ inpatient and outpatient prospective payment systems in 2015 should be raised by 3.25 percent, so as to be concurrent with the changes made to the outpatient systems and LTCH systems. Physicians and Other Health Professionals As members know, the services provided by physicians and health professionals are paid under a fee schedule, with total payments being governed in theory by the sustainable growth rate (SGR). The flawed SGR system has been a continuous concern for MedPAC, and it once again has emphasized the need for its repeal. In making this standing recommendation, MedPAC emphasized the various components it considers when making recommendations regarding physician and other health professional payment updates. Those considerations largely relate to preserving beneficiary access to physician services and maintaining stability for beneficiaries and providers. In the March report, MedPAC made the following recommendations: Repeal the SGR system and replace it with a 10-year path of statutory fee-schedule updates. Particular emphasis should be placed on including a payment rate update that is higher for primary care services than that of specialty services, so as to reduce the disparity between the two types of providers. Increase incentives and opportunities for shared savings for physicians who participate in two-sided risk accountable care organizations (ACOs). Regular collection of data from efficient practices, not just a sample of all practices, to better establish work and practice expense values. Identify overpriced services and reduce their relative value units (RVUs) accordingly. The identification of overpriced services should be based on the data collected from efficient practices, and not that from a mere sample of all practices. Beginning in 2015 and following each five consecutive years thereafter, RVU reductions should achieve an annual numeric goal. The goal should be at least 1 percent of fee-schedule spending. Ambulatory Surgical Centers (ASCs) According to MedPAC, payment adequacy for ASC services remains positive. This indicator, coupled with the notion that access to capital appears adequate for ASCs, the number of which continues to grow, led the Commission to make the following recommendations: Eliminate update to payment rates for ASCs for 2015. Require ASCs to submit cost data on the cost of services they provide to Medicare beneficiaries, so that a Medicare margin, similar to that of other provider types, can be calculated to better assist with determining payment adequacy to ASCs. Status Report: Medicare Advantage (MA) In addition to making payment update recommendations to Congress, MedPAC also submits a status report to Congress regarding the MA program. As members are aware, the MA program allows Medicare beneficiaries the opportunity to receive benefits via private plans as opposed to receiving benefits via the traditional FFS Medicare program. The status report provided by MedPAC essentially provides insight on factors such as enrollment trends, plan availability, and payment comparisons between MA plans versus traditional FFS Medicare beneficiaries. This year’s report included the following findings and recommendations: Enrollment in MA plans increased by nine percent in 2013, which is roughly 28 percent of all Medicare beneficiaries. Employer group MA plans’ bids and resulting payments should be changed to be more in line with the competitively set bids of nonemployer plans. According to MedPAC, employer group MA plans typically have higher bids than nonemployer plans, largely due to the fact that the employer group plans do not have to attract individual participation. Because of such, the employer group plans often lack any incentive to submit competitive bids. To deter this practice, which will reduce Medicare program spending, MedPAC recommends Congress direct the Secretary of Health and Human Services (HHS) to set payments for employer group MA plans more in line with that of nonemployer plans. Beginning in 2016, include hospice in MA benefits packages to promote coordinated and consistent care. The full detailed report along with summaries of recent MedPAC meetings can be found at http://www.entnet.org/Practice/CMS-News.cfm. If members would like additional information on MedPAC, please email the Health Policy team at healthpolicy@entnet.org.
The Medicare Payment Advisory Commission, otherwise known as MedPAC, is the independent commission charged by law to annually review the Centers for Medicare & Medicaid’s (CMS) Medicare payment policies and then make recommendations to control costs under the system. In March, MedPAC sent its annual report to Congress with recommendations that would considerably affect physician and other health professional services, Ambulatory Surgical Center Services (ASCs), hospital inpatient and outpatient services, and more. To keep members apprised of any important communication exchanged between MedPAC and Congress, the Health Policy team not only regularly attends MedPAC meetings, but also reviews the Commission’s two annual reports. Below is a brief summary of the key provisions from this year’s report that are relevant to otolaryngology-head and neck surgery.
Background
One of the main responsibilities of MedPAC is to make payment update recommendations for providers paid under FFS Medicare. An update refers to the percentage change by which the base payment rate is changed from one year to the next. Base payment rates are the payments for all providers in a payment system. The update is determined by looking at a variety of factors, including adequacy of payments to providers in the current year, beneficiaries’ access to care, quality of care provided, providers’ access to capital, and associated costs for both Medicare and providers. In addition, MedPAC looks at what features are likely to change in the coming year (i.e., the year the update will take place). Further, consideration of other influences is also factored into the equation, with MedPAC then determining whether or not a recommended increase, decrease or no change in payment is warranted. The relevance to you is that “these update recommendations, if enacted, could significantly change the revenues providers receive from Medicare.” (Report to the Congress: Medicare Payment Policy. March 2014:xiii.)
This year, MedPAC made recommendations affecting several FFS settings, some of which included hospital inpatient and outpatient services, physicians and other health professionals, and ASCs.
Hospital Inpatient and Outpatient Services
A host of changes were recommended for hospital payment systems for 2015 in an effort to reduce perceived excessive payment rates and create equity among various settings. According to MedPAC, Medicare typically pays more for services performed in hospital outpatient departments (HOPDs), even though such services are often performed in the physician office setting. This discrepancy is viewed as creating an incentive for hospitals to purchase physician offices and convert them to HOPDs, thus receiving nearly double the payment despite no real difference in location and patient mix. To limit this distortion, and address other concerns, MedPAC made the following recommendations:
- Differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications should be reduced or eliminated.
- Long-term care hospital (LTCH) base payment rates should be set from non-chronically ill (CCI) cases to those of acute care hospitals (ACHs), the savings from which should be redistributed to create additional inpatient outlier payments for CCI.
- Payment rates for ACHs’ inpatient and outpatient prospective payment systems in 2015 should be raised by 3.25 percent, so as to be concurrent with the changes made to the outpatient systems and LTCH systems.
Physicians and Other Health Professionals
As members know, the services provided by physicians and health professionals are paid under a fee schedule, with total payments being governed in theory by the sustainable growth rate (SGR). The flawed SGR system has been a continuous concern for MedPAC, and it once again has emphasized the need for its repeal. In making this standing recommendation, MedPAC emphasized the various components it considers when making recommendations regarding physician and other health professional payment updates. Those considerations largely relate to preserving beneficiary access to physician services and maintaining stability for beneficiaries and providers. In the March report, MedPAC made the following recommendations:
- Repeal the SGR system and replace it with a 10-year path of statutory fee-schedule updates. Particular emphasis should be placed on including a payment rate update that is higher for primary care services than that of specialty services, so as to reduce the disparity between the two types of providers.
- Increase incentives and opportunities for shared savings for physicians who participate in two-sided risk accountable care organizations (ACOs).
- Regular collection of data from efficient practices, not just a sample of all practices, to better establish work and practice expense values.
- Identify overpriced services and reduce their relative value units (RVUs) accordingly. The identification of overpriced services should be based on the data collected from efficient practices, and not that from a mere sample of all practices.
- Beginning in 2015 and following each five consecutive years thereafter, RVU reductions should achieve an annual numeric goal. The goal should be at least 1 percent of fee-schedule spending.
Ambulatory Surgical Centers (ASCs)
According to MedPAC, payment adequacy for ASC services remains positive. This indicator, coupled with the notion that access to capital appears adequate for ASCs, the number of which continues to grow, led the Commission to make the following recommendations:
- Eliminate update to payment rates for ASCs for 2015.
- Require ASCs to submit cost data on the cost of services they provide to Medicare beneficiaries, so that a Medicare margin, similar to that of other provider types, can be calculated to better assist with determining payment adequacy to ASCs.
Status Report: Medicare Advantage (MA)
In addition to making payment update recommendations to Congress, MedPAC also submits a status report to Congress regarding the MA program. As members are aware, the MA program allows Medicare beneficiaries the opportunity to receive benefits via private plans as opposed to receiving benefits via the traditional FFS Medicare program. The status report provided by MedPAC essentially provides insight on factors such as enrollment trends, plan availability, and payment comparisons between MA plans versus traditional FFS Medicare beneficiaries. This year’s report included the following findings and recommendations:
- Enrollment in MA plans increased by nine percent in 2013, which is roughly 28 percent of all Medicare beneficiaries.
- Employer group MA plans’ bids and resulting payments should be changed to be more in line with the competitively set bids of nonemployer plans. According to MedPAC, employer group MA plans typically have higher bids than nonemployer plans, largely due to the fact that the employer group plans do not have to attract individual participation. Because of such, the employer group plans often lack any incentive to submit competitive bids. To deter this practice, which will reduce Medicare program spending, MedPAC recommends Congress direct the Secretary of Health and Human Services (HHS) to set payments for employer group MA plans more in line with that of nonemployer plans.
- Beginning in 2016, include hospice in MA benefits packages to promote coordinated and consistent care.
The full detailed report along with summaries of recent MedPAC meetings can be found at http://www.entnet.org/Practice/CMS-News.cfm. If members would like additional information on MedPAC, please email the Health Policy team at healthpolicy@entnet.org.