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MedPAC Eyes Improvements in Nursing Facility, Primary Care Payments, Drug Plans

By John Reichard, CQ HealthBeat Editor

March 7, 2008 -- The Medicare Payment Advisory Commission (MedPAC) is considering several draft recommendations to Congress and the Medicare program regarding skilled nursing facility payments, the performance of prescription drug plans, and primary care.

MedPAC staff presented the draft recommendations to commissioners at the March 5–6 meeting of the panel. Chairman Glenn Hackbarth cautioned observers that the recommendations may be changed and that they may or may not come up for a vote next month on including them in MedPAC's June report to policy makers.

One of the draft recommendations calls for revisions to the prospective payment system Medicare uses to pay skilled nursing facilities. Right now, the payments consist of a nursing component, a therapy component, and an "other" component that includes room and board. The revisions would add a "separate non-therapy ancillary component," a term that includes items such as prescription drugs and intravenous therapy. They also would revise the therapy component to base payments "on predicted patient care needs," and adopt a provision for "outlier payments" covering unusual financial losses on patients.

A second draft recommendation calls on the secretary of the Health and Human Services Department, which oversees the Centers for Medicare and Medicaid Services, to require the facilities to report diagnosis information and dates of service on their claims. In addition, the facilities would be required to report "services they furnish separately" on their assessments of patients, and to disclose nursing costs separately from routine costs on Medicare cost reports.

Facilities that have the largest profits on prospective payments would take the largest cuts under the revisions while those that are losing money on the payments would see the biggest increases, according to a MedPAC staff analysis. The recommendation for better data would "enhance the design" of prospective payments, the analysis said.

The American Association of Homes and Services for the Aging issued a statement Thursday saying that the research presented at the meeting shows that if the new payment system is adopted "Medicare payments would shift and—among other things—recognize the higher costs not-for-profit nursing homes face." The association's president, Larry Minnix, said "we hope that Congress will give due attention to this thoughtful work on MedPAC's part."

MedPAC also is weighing a draft recommendation aimed at improving the performance of prescription drug plans offered under Part D of the Medicare program. One draft recommendation calls for the HHS secretary to develop a measure of access "that calculates whether beneficiaries get a prescribed drug or its alternative without undue delay."

A second draft recommendation would address the fact that some plans do not provide pharmacies with the information they need to improve access to prescription drugs, according to a MedPAC staff analysis. The HHS secretary "should require plans to transmit information to pharmacies when they reject a prescription stating why the drug is not covered and if the plan covers a clinical alternative," the draft language states.

MedPAC also is wrestling with worries that the nation faces a shortage of primary care physicians, who health care analysts see playing a key role in coordinating health care services and improving its efficiency. Under current payment systems in traditional Medicare, "primary care services are at risk of being undervalued" and "underprovided," a MedPAC staff analysis said. The number of U.S. medical school graduates "selecting family practice and primary care residencies has declined steadily," the analysis added.

The panel is looking at three draft recommendations in this area. One states that Congress should establish a payment adjustment that would "increase the payment for a primary care service if a practitioner designated by the [HHS] secretary as a primary care practitioner furnishes the service." The adjust would be "budget-neutral," meaning other types of physician payment would have to be nicked to pay for the higher primary care payments. Congress should require HHS to identify the physician specialties that can receive the adjustment, a second draft recommendation says. "The secretary should use rule-making to determine the criteria to identify qualifying primary care practitioners," it adds.

The third draft recommendation deals with promoting the establishment of "medical homes" for chronically ill beneficiaries. The concept would involve modest per-beneficiary monthly payments to doctors who provide such a home. "Congress should initiate a medical home pilot project in Medicare," the draft language states. The homes would have to meet "stringent criteria," including furnishing primary care; using health information technology; conducting case management services to coordinate services; maintaining "24-hour patient communication and access;" keeping up-to-date records of advance directives by patients about their wishes if they become medically incapacitated; and being accredited or certified by an external accrediting body.

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