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June 19, 2017

MedPAC proposes accelerating post-acute care payment system, creating new Medicare Part B program

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The Medicare Payment Advisory Commission (MedPAC) in its June report to Congress released Thursday proposed accelerating a new payment system for post-acute care providers and creating a new Medicare Part B program.

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The 17-member commission is made up of health policy experts and providers who are tasked with making recommendations to Congress on Medicare payment and policy issues. The recommendations are not binding.

Report findings

Post-acute care recommendations

The panel recommended Congress implement a unified payment system for post-acute care in 2021—which is three years earlier than the timeline outlined under the Improving Medicare Post-Acute Care Transformation Act of 2014. MedPAC said the unified PAC prospective payment system should include an optional three-year transition period and determine payments based on patient characteristics, instead of the site of service.

MedPAC also noted that Medicare payments to post-acute care providers typically exceed providers' costs by 14 percent. The panel said that Congress should lower aggregate payments for the four main post-acute care settings—skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care hospitals—by 5 percent "to more closely align [them] with the cost of care."

Medicare Part B recommendations

MedPAC's report also includes several Medicare Part B drug payment policy changes intended to rein in costs for drugs administered in a physician's office or hospital outpatient setting.

Mark Miller, executive director of MedPAC, said drug costs under Part B are increasing by about 9 percent annually. To curb the costs and address what the commission called a scarcity of competition, MedPAC recommended:

  • Consolidating billing codes used for biologics and biosimilars to fuel competition;
  • Implementing an average sales price inflation rebate to protect against significant price increases;
  • Lowering the payment rates for drugs paid at 106 percent of the wholesale acquisition cost to 103 percent of the wholesale acquisition cost; and
  • Requiring all manufacturers of Part B drugs to report average sales price data, and levying a fine against those that fail to report the data.

MedPAC also recommended developing in future years a new program called the Part B Drug Value Program, which would facilitate drug price negotiations between providers and manufacturers. MedPAC wrote, "The intent of the Drug Value Program would be to obtain lower prices for Part B drugs by permitting private vendors to use tools … to negotiate prices with manufacturers and by improving incentives for provider efficiency through shared savings opportunities." 

Other proposals

MedPAC in its report also discussed several other changes, such as:

  • Considering whether to use a premium support model in Medicare under which the government would pay a fixed amount per beneficiary;
  • Expanding CMS' Open Payments database to include other clinicians, such as physician assistants and nurse practitioners;
  • Implementing past site-neutral payment recommendations so that total payment rates for evaluation and management office visits are the same whether the service is provided in a physician office or an outpatient department;
  • Potentially linking payment at stand-alone emergency departments with patient acuity; and
  • Redesigning MACRA's Quality Payment Program tracks to help beneficiaries find a provider and encourage more providers to participate in advanced alternative payment models (Mongan, McKnight's Long Term Care News, 6/16; Firth, MedPage Today, 6/16; Ellison, Becker's Hospital CFO Report, 6/16; MedPAC report, 6/15).

Become a post-acute population manager

With uncertainty around the speed of value-based payment implementation, progressive organizations may be tempted to skip ahead and take on full accountability for the outcomes of a subset of patients—which is not a decision to be made lightly.

Join us on July 11 for a webconference about how providers can position themselves for flexibility in their current pursuits and growth in future endeavors

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