Health Reform WK-EDGE HRRP gets MedPAC’s stamp of approval, but there’s other work to be done
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Thursday, June 21, 2018

HRRP gets MedPAC’s stamp of approval, but there’s other work to be done

By Sheila Lynch-Afryl, J.D., M.A.

The Medicare Payment Advisory Commission (MedPAC) concluded in its June 2018 annual report to Congress on Medicare payment policy that the Hospital Readmissions Reduction Program (HRRP) contributed to a significant decline in readmission rates and saved the Medicare program about $2 billion. The report also analyzed several other Medicare issues, including rebalancing the physician fee schedule toward ambulatory services, device payment policies, and post-acute care (PAC) issues (MedPAC Report, June 19, 2018).

Hospital Readmissions Reduction Program. Sec. 3025(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) created the HRRP by adding Soc. Sec. Act §1886(q). The 21st Century Cures Act of 2016 (P.L. 114-255) Sec. 15002(c) required MedPAC to review overall hospital readmissions and determine whether the readmissions are related to any changes in emergency and outpatient services furnished. MedPAC determined that from 2010 to 2016, raw readmission rates fell by 3.6 percentage points for acute myocardial infarction, 3.0 percentage points for heart failure, and 2.3 percentage points for pneumonia, compared to 1.4 percentage points across conditions not covered by the HRRP. This decline occurred without causing a material increase in emergency department visits or observation stays and without having an adverse effect on mortality rates.

Rebalancing the physician fee schedule. MedPAC expressed concern that ambulatory evaluation and management (E&M) services like office visits are underpriced compared to other services in the physician fee schedule, which could limit beneficiary access to such services. Under the fee schedule’s budget-neutrality rules, MedPAC said, the relative prices for ambulatory E&M services are too low because the prices for other services have become artificially high. It recommended rebalancing the fee schedule in a way that would increase payment rates for ambulatory E&M services while reducing payment rates for other services such as procedures, imaging, and tests, without increasing Medicare spending.

Post-acute care. In June 2017, MedPAC recommended that a unified PAC prospective payment system (PPS) for skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals be implemented beginning in 2021 with a three-year transition and a corresponding alignment of setting-specific regulatory requirements (see MedPAC’s annual exam gives Medicare Advantage and Part D a check-up, June 16, 2016; ‘Concerned’ MedPAC suggests improvements to MACRA programs, Part B drug payments, June 21, 2017). In its June 2017 report, MedPAC recommended changes to the PAC PPS that would account for sequential stays in one episode of post-acute care. It also discussed approaches for giving hospitals more flexibility to help beneficiaries in finding higher quality PAC providers after a hospital stay.

Medical device payment. MedPAC explored the possibility of moving additional items of durable medical equipment, prosthetic devices, prosthetics, orthotics, and supplies (DMEPOS) to the Competitive Bidding Program to reduce spending for Medicare and beneficiaries. In addition, the report discussed physician-owned distributors (PODs) of devices and prosthetics and ways to limit potential program integrity risks that they pose, including two options to revise the Stark law and requiring PODs to report under the Open Payments program.

Accountable care organizations. MedPAC reviewed the current accountable care organization (ACO) models—creatures of ACA Sec. 3022—and found that two-sided models are producing small savings relative to the benchmarks set by CMS. All, however, are maintaining or improving quality. MedPAC raised six issues that it deemed important for the long-term sustainability of two-sided risk ACOs.

Companies: Medicare Payment Advisory Commission

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