Washington Health Policy Week in Review Archive

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

  • April 11, 2016 Issue
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Panel Approves Path for Overhaul of Medicare Post-Hospital Pay

By Kerry Young, CQ Roll Call

April 7, 2016 -- Congressional advisers on Thursday approved recommendations for overhauling Medicare's fragmented approach to paying for treatment for people recovering after hospital stays for serious surgeries and illnesses.

Members of the Medicare Payment Advisory Commission (MedPAC) voted unanimously by a show of hands to approve a report on the initial steps needed to move toward creating a unified payment for so-called post-acute care. They discussed the broad themes of this work, but left many of its details to be revealed when the report is published in June.

MedPAC member Jack Hoadley described the commission's report as a guide for a future overhaul of payments for post-acute care.

"I hope it does happen and that it does happen as quickly as possible," said Hoadley, a Georgetown University researcher.

Medicare payments for post-hospital care more than doubled, to $59 billion, between 2001 and 2013 despite concerns about fiscal waste. The absence of clear guidelines on appropriate post-hospital care is seen as one of the reasons for this growth. People can be assigned fairly randomly now to care in one of four tracks: skilled nursing centers, specialty inpatient rehabilitation centers, long-term care hospitals and services provided at home. Medicare often pays more in certain settings for care of similar patients, without establishing if there is an advantage to the more expensive care. 

Medicare officials and lawmakers may want to use an overhaul of payments to shift the program's goals, according to MedPAC commissioner William J. Hall, a geriatrician and professor at the University of Rochester. An overhauled approach may need to weigh more carefully how well people maintain the abilities of daily life. 

"The purpose of health care is really to help people stay independent," Hall said Thursday.

Among the ideas discussed at the meeting was the possible need for a measure of hospital readmissions for frail people treated in post-acute settings.

Congress and Centers for Medicare and Medicaid Services (CMS) may act more quickly to overhaul post-acute payments than would be expected under the framework that lawmakers created last year in legislation (PL 113-185) that stretches the timetable of an overhaul into the next decade. MedPAC members previously raised concerns about this timeline.

The law mandates MedPAC to publish ideas for a payment overhaul--through the report the panel approved Thursday--by June 2016. The Department of Health and Human Services then must issue another report by 2022. MedPAC must respond by around 2023 with a design for a new post-hospital payment.

Lawmakers in search of an offset for a future budget deal next year or beyond may be tempted to mandate changes in post-acute care that could save Medicare funding and allow more spending elsewhere in the federal government. For now, Congress seems unlikely to soon take up legislation specifically to make major changes in Medicare, despite the deep interest of House Ways and Means Chairman Kevin Brady, R-Texas, in the field of post-acute care.

CMS could take the lead in these efforts.

Its Comprehensive Care for Joint Replacement Model addresses one of the biggest areas in post-acute care, which is how people on Medicare recover after hip and knee replacements, the most common inpatient surgery among people on Medicare. The program paid more than $7 billion for more than 400,000 procedures in 2014.

Medicare on April 1 kicked off this program that compels about 800 hospitals in 67 regions of the country to eventually face financial risks and rewards based on how well people fare after hip and knee replacements. The hospitals' future pay will reflect how well their elderly and disabled patients are judged to fare in the 90 days after their discharges after surgery. 

Surgeons and hospitals until now have not needed to figure out which forms of post-hospital care work best for elderly people, said Blair Childs, senior vice president at Premier Inc., an alliance of about 3,600 U.S. hospitals and 120,000 other medical providers.

The test program provides an incentive for hospital officials to determine which approaches to recovery after orthopedic surgery most benefit their patients, Childs said. It should foster a greater coordination of care.

"It's breaking down the silos that exist in Medicare that are completely illogical," Childs said in an interview last week. "It's forcing the payment system to match the patient experience."

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