The Medicare Payment Advisory Commission (MedPAC) is a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on all aspects of the Medicare program (cost, reimbursement, access, quality, etc.). MedPAC issues two annual reports to Congress, one in March and another in June. These reports contain the policy recommendations of the Commission.
MedPAC can only make recommendations. Any recommendation made by MedPAC would have to be adopted by Congress and signed by the President if the policy recommendation required a change in the Medicare Statute or adopted by CMS if the policy recommendation required a change in Medicare regulations or interpretation of a regulation.
This month, MedPAC Commissioners agreed to a number of recommendations to include in its annual report to Congress (slated for delivery in March).
The Commissioners unanimously agreed to recommend that Medicare adopt site-neutral payments for Skilled Nursing Facilities (SNF) and Inpatient Rehabilitation Facilities (IRF) for certain conditions. This will result in a reduction in IRF payments to align the rates for the affected services with the lower SNF rates. This realignment will be phased in over three years. As expected, the IRF industry opposes this recommendation, arguing that they are more adept at providing rehabilitation services than SNFs.
Site-neutral payments have long been considered as a policy option for Medicare to save money. MedPAC estimates that site-neutral payments could save Medicare up to $5 billion over five years. MedPAC, in conjunction with the Urban Institute, conducted a study on the need to reform SNF payments further citing the need to reform Medicare’s payment system.
Although the application of “site neutral” payments for SNF/IRF providers does not affect most medical billing companies or their clients, the decision is considered significant because of the precedent it would establish if adopted by Congress. Within the past year, much has been written in major media outlets about the fact that Medicare pays more for certain services when provided in a hospital owned facility when compared to what Medicare would pay for that same exact service if provided in physician’s office. Adoption of a “site neutral” policy for physician services would have a huge impact on physician payments in certain settings.
Congress, as part of an SGR reform package, for example, could mandate that CMS adopt “site neutral” payments for physician services and potentially obtain significant “savings” in Medicare spending as a result. Those savings could be used to partially pay for a long-term SGR fix, for example.
Another recommendation the Commissioners plan to include in the March report is to provide a payment boost to primary care services. This measure is intended to replace a similar pay increase which is scheduled to expire at the end of 2015. The new bonus payment being proposed would be a per-beneficiary payment at the same amount of the expiring bonus payments.
MedPAC proposes to pay for this increase by recommending that Congress offset the cost of this bonus with a 1.4% reduction in payments for non-primary care services.
Many health policy experts, MedPAC among them, believe that primary care services continue to be undervalued. The hope is that this may help to address that historic bias.
Finally, the Commissioners discussed a number of other issues but failed to make any recommendations in these areas. Topics on the Commissions radar screen for future action include:
• Ways to fix the current Medicare hospital short-stay problem sometimes referred to as the “Two Midnight Rule.”
• Revising the three-day inpatient stay requirement for SNF coverage.
• Clarifying policies which allow Recovery Audit Contractors (RAC) to take advantage of the ambiguity to target short-term hospital stays in their claims reviews.
If more progress is made towards specific changes, the Commission could include recommendations in either their upcoming March Report to Congress or their June Report.
