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MedPAC Recommends Medicare Cut Home Health Payments in 2010

February 27, 2009 -- Home health providers would see their Medicare reimbursements cut by 5.5 percent in 2010 while payments to skilled nursing facilities and inpatient rehabilitation facilities would be frozen at current rates, according to the Medicare Payment Advisory Commission's March report released Friday.

For hospitals, the panel known as MedPAC recommends that Congress increase payment rates for the acute inpatient and outpatient prospective payment systems in 2010 by the projected rate of increase in the hospital market basket index. Congress should also implement a hospital quality incentive payment program funded by a 1 percent reduction in indirect medical education payments.
The report also reiterates previous MedPAC recommendations on increasing payments to primary care providers and decreasing payments to private insurers in the Medicare Advantage program.

While Medicare payments to physicians should be increased by 1.1 percent, MedPAC also recommends that Congress establish a budget-neutral payment system that would give primary care physicians higher payments, with those payments financed by lower Medicare reimbursements to some medical specialists. In the report, MedPAC Chairman Glenn M. Hackbarth said Congress should "redesign and rebuild our deteriorating system of primary care," basing those payments "on the value of primary care to a well-functioning health care system."

MedPAC recommends that Medicare Advantage plans be paid the same as providers in the traditional fee-for-service plan, with "MA" plans that provide higher quality care receiving higher payments for better performance. Congress should "revamp MA so that private plans offered to Medicare beneficiaries are rewarded for excellent performance, not just because they are private," Hackbarth wrote.

On average, MedPAC said, Medicare Advantage plans are paid 14 percent more than traditional fee-for-service Medicare, with private fee-for-service plans paid 18 percent more. Separately, a budget outline that President Obama submitted to Congress on Thursday would have the plans submit bids to Medicare rather than be paid on the current per-county reimbursement rate that is set by law.

If Congress changes the current MA payment rates, "there will be fewer managed care plans and the generous plans they have now will be less generous," MedPAC executive director Mark Miller said at a breakfast briefing with reporters.

The MedPAC report also recommends that manufacturers and distributors of drugs, biologicals, medical devices and supplies publicly report their financial relationships with doctors, doctors' groups, pharmacists, health plans and other medical professionals and that information be available to the public. MedPAC is also recommending that Congress require all hospitals and other entities that bill Medicare to annually report the ownership share of each physician who directly or indirectly owns an interest in the entity, excluding publicly traded trade corporations.

MedPAC is also urging Congress examine Medicare's hospice benefit. In some cases, the report concludes, MedPAC has found that Medicare's hospice payment system contains incentives for very long stays, which have been profitable for the hospice provider but may led to the benefit being used inappropriately in some cases.

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