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Tag: MedPac

MedPAC Adopts Recommendations for 2016 Payment Updates

From: CHA – 1/16/15

The Medicare Payment Advisory Commission (MedPAC) has approved final recommendations for 2015 Medicare payment updates, which will be released in March. The recommendations are nearly identical to the commission’s 2014 recommendations, with some additions, and will be closely watched by Congress as it looks for savings to fund a long-term repeal of the Medicare sustainable growth rate for physician payments. A complete list of specific MedPAC recommendations follows.

MedPAC’s recommendations include:

  • Hospital inpatient and outpatient payments: MedPAC adopted its draft December recommendation and recommends a 3.25 percent increase for hospital inpatient and outpatient prospective payment systems (PPS) in 2016, noting that its recommendation is 5.25 percent if the sequester continues in 2016. MedPAC notes that even the most efficient hospitals it has identified will experience negative Medicare margins in 2016. However, MedPAC also stands by its recommendation to Congress to reduce or eliminate payment differences between hospital outpatient departments and physician offices for 66 selected procedures. The commission also recommends Congress pay long-term care hospitals (LTCHs) the same rates as general acute care hospitals for cases involving patients who are not deemed “chronically critically ill” (CCI) — defined as an intensive care unit stay of at least eight days. Savings realized by cutting LTCH payments would be redistributed to create a new outlier pool for CCI cases treated in inpatient PPS hospitals. The LTCH policy would be phased in over three years.

    Despite hospital opposition to the site-neutral recommendations noted above, MedPAC believes strongly in the principal that clinically similar patients can be seen in multiple provider settings and, as such, the payment rates should be equal. CHA has argued that both of these site-neutral recommendations are not only harmful to hospitals and patients, but that the analysis MedPAC engaged in setting forward these recommendations is outdated. Both the outpatient PPS and LTCH PPS have adopted significant policy changes that have not been accounted for by MedPAC. CHA is very disappointed in the site-neutral recommendations.

  • Inpatient rehabilitation facilities and skilled-nursing facilities: MedPAC finalized its recommendation to eliminate the payment update for SNFs and IRFs in 2015. MedPAC continues to call for a recalibration of the SNF PPS to pay more for medically complex patients and to rebase the payment system over a period of time. In addition, MedPAC has voted to recommend that Congress direct the Secretary to eliminate the differences in payment between IRFs and SNFs for selected conditions. While its analysis focused on 22 MS DRGs for consideration, MedPAC stepped back from its more specific draft recommendation and noted that the conditions should be selected by the Secretary and considered through a notice of public comment. MedPAC also notes that this policy should be implemented over three years and that the IRF would retain its current add-on payments, but that the site-neutral payment should be set to the average SNF rate. Further, MedPAC recommends that regulations related to the 60 percent rule be reviewed and that such cases be removed from the threshold in order to remain compliant. The commission noted that while the payment would change in the IRF, this benefit would remain a Part A benefit and, therefore, subject to the same cost sharing as currently applied to the SNF stay.
  • Ambulatory surgery center payments: MedPAC finalized its recommendation to eliminate the payment update for ASCs in 2016.
  • Long-term care hospitals: MedPAC finalized its recommendation to eliminate the payment update for LTCHs in 2016.
  • Home health: The commission restated previous recommendations from 2011 and 2012 in reforming the payment system and recommends that Congress direct the Secretary to reduce payments for those with higher readmission rates than the benchmark rate that would be known in advance. The previous recommendations included reducing payments through a full “rebasing” of reimbursement. This month the commission adopted its recommendation to eliminate the update for FFY 2015.
  • Hospice: The commission adopted its recommendation to eliminate the update for FFY 2015.

Read more: MedPAC Adopts Recommendations for 2016 Payment Updates

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MedPac Annual Report to Congress

From: MedPac – 3/15/13

MedPac released their annual report to Congress last week that includes recommended updates to 2014 payment updates. The report touches on Medicare Part A, B, C & D programs.

The executive summary is an excellent read of MedPac’s thinking in this report for 2014. These recommendations play a larger role in the reimbursement changes in Medicare. They have recommended the following payment updates for Medicare Part A & Part B services:

Program % Change
Hospital Inpatient Services


Hospital Outpatient Services


IP Rehab PPS

No Update

IP Psych PPS



No Update


No Update


No Update



Reduction from Rebasing



Reduction from Rebasing

I have included MedPac’s comments related to both SNF & HHA that address what they believe to be overpayments from the Medicare program:

SNF PPS Excerpt:

Last year, the Commission made a recommendation to first restructure the SNF payment system and then to rebase payments in the following year. Specifically, the Commission recommended revising the SNF PPS and, during the year of revision, holding payment rates constant (no update). The Commission discussed three revisions to improve the accuracy of payments. First, payments for therapy services should be based on patient characteristics (not services provided). Second, payments for nontherapy ancillary services (such as drugs) need to be removed from the nursing component and made through a separate component established specifically to adjust for differences in patients’ needs for these services. Third, an outlier policy would be added to the PPS. After the PPS is revised, in the following year, CMS would begin a process of rebasing payments, starting with a 4 percent reduction in payments.

HHA Excerpt:

In 2011, the Commission made a multiyear recommendation for home health payments, and this report reiterates that recommendation, including rebasing the home health PPS, changing the case-mix system, implementing a copay for certain home health episodes, and investigating and stopping fraud and abuse in areas with aberrant patterns of use of home health services. Overpaying for home health services has negative financial consequences for the federal government and raises Medicare premiums paid by the beneficiary. Implementing the Commission’s prior recommendation for rebasing would reduce payments and better align Medicare’s payments with the actual costs of home health agencies.

I did not locate the recommended payment update to the Inpatient Psych PPS rates in my quick review of the document.

MedPac Annual Report to Congress

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MedPAC Approves 1% Update for Hospital Inpatient & Outpatient Payments

From: AHA news Now – 1/10/13

The Medicare Payment Advisory Commission today unanimously approved a final recommendation to increase inpatient and outpatient hospital payments by 1% in 2014. MedPAC Chair Glenn Hackbarth clarified that the 1% update should occur despite recent provisions in the American Taxpayer Relief Act that result in a negative update. Commenting on the update, AHA President and CEO Rich Umbdenstock said, “America’s hospitals appreciate MedPAC’s recommendation to Congress to increase Medicare payments for hospital services. Since 2010, hospitals have been hit with repeated cuts, totaling $250 billion over the next 10 years. After a thoughtful discussion and analysis, MedPAC recognized that a positive update for hospital services is warranted to ensure patients continue to have access to high-quality, effective and innovative care. At the same time, we continue to believe that MedPAC’s recommendation for additional reductions for document and coding changes is unwarranted. We strongly urge Congress to follow MedPAC’s payment update recommendation to ensure that the quality health care that hospitals provide remains available to the patients they serve, and to reject any further reductions to hospitals in the upcoming debate on the debt ceiling and sequester.” In other action today, MedPAC voted to eliminate the update for ambulatory surgical centers and require them to submit cost data, and voted not to increase the outpatient dialysis bundled payment rate in 2014.

MedPAC Approves 1% Update for Hospital Inpatient & Outpatient Payments

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