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January 18, 2017

Hospitals and physicians should be paid more, MedPAC says

Daily Briefing

The Medicare Payment Advisory Commission (MedPAC) last week approved recommendations that call for increasing Medicare payments to health care providers in fiscal year (FY) 2018.

MedPAC will include the recommendations in its March report to Congress.

Hospital, physician payment recommendations

MedPAC commissioners unanimously approved recommendations that call for increasing FY 2018 Medicare payments for hospital inpatient and outpatient services and physician visits, as outlined by current law.

Federal law currently calls for a FY 2018 increase of about 1.85 percent for hospital payments and about 0.5 percent for physician payments.

In addition, MedPAC approved a recommendation that would require Medicare to include a modifier on claims for services provided at off-site EDs in an effort to help track spending on such care, as well as to determine whether standalone EDs unfairly benefit from an exemption to site-neutral payments.

MedPAC also approved a recommendation that calls for no FY 2018 payment update for ambulatory surgical centers, skilled nursing facilities, hospices, or long-term care hospitals. The commission recommended modest cuts to FY 2018 payments to home health agencies and inpatient rehabilitation facilities.

MA payment recommendations

MedPAC also approved a recommendation that calls on policymakers to change the formula used to calculate payment rates for Medicare Advantage (MA) plans.

Medicare currently sets MA payments by evaluating how much Medicare spends on Parts A and B of the program. However, MedPAC members say Medicare could be underpaying MA insurers because it does not consider the number of beneficiaries who opt out of Part B coverage when calculating the payments.

To address the issue, MedPAC suggested the HHS secretary modify the formula to account only for fee-for-service spending data on beneficiaries enrolled in both Part A and Part B. That change would not require legislation, according to MedPAC.

The commission estimated that the change would increase federal spending by between $750 million and $2 billion in the first year and as much as $10 billion over five years. Some MedPAC commissioners expressed concern over the potential spending increases, while others said MedPAC should focus on improving the MA program over saving money.

CMS finalizes new methodology for calculating lab test payment rates

MedPAC Commissioner Craig Samitt, chief clinical officer at Anthem, said, "We need to occasionally be willing to spend to ensure consistency."

According to Modern Healthcare, it is unclear whether HHS under the incoming Trump administration will adopt the recommendation.

Other issues

MedPac also approved a recommendation that calls for continued focus on changes to Medicare Part D's:

  • Appeals process;
  • Electronic prior authorization requirements; and
  • Reinsurance programs.

Further, AHA News reports that MedPAC commissioners also discussed:

  • A desire to pay closer attention to drug pricing issues; and
  • Changes to the Quality Payment Program authorized by the Medicare Access and CHIP Reauthorization Act (AHA News, 1/12; Dickson [1], Modern Healthcare, 1/12; Dickson [2], Modern Healthcare, 1/12; Young, CQ HealthBeat, 1/12 [subscription required]).

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