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.

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    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).

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    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.

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