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Medicare Advisers Proceed Toward Approving 2017 Recommendations

By Kerry Young, CQ Roll Call

December 11, 2015 -- An influential panel this week highlighted some of the stubborn challenges in managing more than $300 billion in annual Medicare expenses, seeking to bolster the case for an overhaul of post-hospital care and venturing into a new discussion of a federal discount drug program.

The Medicare Payment Advisory Commission (MedPAC) on Thursday and Friday reached apparent consensus on seven recommendations on 2017 payment policies to Congress and the Department of Health and Human Services. It likely will formally adopt these next month with little further discussion, while having more conversation on proposals affecting the insurer-run Medicare Advantage plans, hospitals and inpatient rehabilitation centers, said Francis J. Crosson, the MedPAC chairman. MedPAC will vote at its Jan. 14-15 meeting on a package of formal recommendations for its annual March report to Congress. 

Underlying many of the discussions about payment are concerns about the effects that spending decisions have on elderly and disabled Americans. MedPAC appears likely to reiterate a recommendation for essentially flat payments for long-term care hospitals, which are intended to serve the most critically ill people. Members of the panel agreed that current reimbursement policy has been at least adequate for long-term care hospitals, with Medicare paying about $5.4 billion last year. But there also are questions about whether this high-tech setting is the right choice for those patients who are nearing the end of their lives, given alternatives such as hospice care, said Rita Redberg, a MedPAC member and cardiologist at the University of California, San Francisco. In many cases, there's little "realistic hope of improvement" for patients in these institutions, which can be costly, she said.

"People don't like to die in institutions on ventilators. They like to be at home if possible," she said.

MedPAC members, lawmakers in Congress and officials at Medicare have wrestled for years with ways to improve the care for people who have suffered serious illnesses and surgeries, a roughly $60 billion annual expense for the program. This post-acute care includes skilled nursing and inpatient rehabilitation facilities, as well as long-term care hospitals and home health services.

While addressing the immediate question of making recommendations on 2017 payment rates, MedPAC members noted the need for more substantial changes in this field with an effort to identify which settings benefit patients most. Commissioner and University of Pennsylvania professor Mary Naylor on Friday suggested the January report include supportive comments on efforts to establish a "whole system of post-acute care."

MedPAC may also move into the contentious debate about the 340B drug pricing program in the March report. The commission likely will further discuss in January a plan that would cut Medicare payments by 10 percent for medicines bought through this program. This would allow beneficiaries enrolled in the program to save about $70 million, and federal officials would then redirect $300 million in Medicare savings to a pool of money that would remain with the hospitals for uncompensated care. Still, groups including the American Hospital Association have objected strongly to this proposal.

MedPAC's recommendations carry clout with lawmakers, although it often takes many years for them to have an effect.

MedPAC members this week supported a draft recommendation that largely sticks with the status quo for the payment rate for doctors. It would back the slated 0.5 percent increase in 2017 for a factor used to set doctors' payments, a figure that was in the April overhaul of Medicare physician reimbursements (PL 114-10). This law fulfilled some of MedPAC's long-standing requests for major changes in Medicare reimbursement for doctors, including the implementation of steps intended to tie physicians' payments more to the quality of care delivered.

Other draft 2017 recommendations proposed for January votes include:

  • Medicare Advantage insurer-run plans: Congress should eliminate a cap on benchmark amounts and the doubling of the quality increases in specific counties.
  • Ambulatory surgical centers: Congress should eliminate the update to the payment rate for calendar 2017. It also should require ambulatory surgical centers to submit cost data.
  • Dialysis: Congress should increase the outpatient dialysis base payment rate by the update specified in current law for calendar 2017.
  • Home health services: Congress should direct HHS to eliminate the payment update for 2017 and implement a two-year rebasing of the payment system beginning in 2018. Congress should direct HHS to eliminate the use of therapy visits as a factor in payment determinations, concurrent with rebasing.
  • Hospice: Congress should eliminate the update to payment rates for fiscal 2017.
  • Hospitals: Update inpatient and outpatient payments by the amount specified in current law, projected to be 1.65 percent. This recommendation also includes the changes proposed for Medicare's coverage of medicines bought through the 340B drug program. 
  • Inpatient rehabilitation facilities: Congress should eliminate the update to the payment rates for fiscal 2017.
  • Skilled nursing facilities: Congress should eliminate the market basket update for 2017 and 2018 and direct H to revise the prospective payment system. In 2019, the HHS should report to Congress on the impacts of the reformed prospective payment system and make any additional adjustments to payments needed to more closely align payments and costs.

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