Epstein Becker & Green reviewed the March Medicare Payment Advisory Commission (MedPAC) Report and prepared the following summary of issues AAHKS is tracking:

MedPAC’s March Report includes analyses of payment adequacy in fee-for-service Medicare and makes recommendations for 2017 rate adjustments under the various fee-for-service payment systems. The report also provides a review of Medicare Advantage and the prescription drug benefit under Part D. MedPAC’s recommendations are based on an assessment of payment adequacy that examines beneficiaries’ access to and use of care, the quality of the care they receive, supply of providers, providers’ access to capital, and providers’ costs and Medicare’s payments.

MedPAC recommendations for inpatient and outpatient hospital services:

  • Payment be increased as specified in current law (1.75 percent), concurrent with reductions to the payment rate for Part B drugs at 340B hospitals and savings from such reductions to be used to fund the uncompensated care pool.
  • Payments for physicians and other health professionals be updated by the amount specified in current law (.5 percent).
  • No payment update for ambulatory surgical centers (ASC), concurrent with a requirement that ASCs submit cost data to CMS to help determine if an alternative price index should be used as an appropriate proxy for ASC costs

While MedPAC makes brief mention of the fact that CMS is testing payment reforms, such as bundled payments and accountable care organizations, there is no discussion of these payment reforms. With respect to physician payment reform under MACRA – MedPAC mentions merit-based incentive payments and alternative payment models, and identifies potential adjustments and incentive payments under these models in future years, but does not provide any discussion of these programs.

Hip and knee procedures are only discussed in the context of adherence to the inpatient rehabilitation facilities (IRF) compliance threshold (the 60% rule). With respect to site-neutral payments, MedPAC states that it has recommended site-neutral payments to IRFs for select conditions treated in both IRFs and skilled nursing facilities, and that it will continue to analyze opportunities for applying site-neutral payments to other services and settings. Read the full report.