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Medicare Payment Policy: MedPAC Recommendations to Congress
posted: February 29, 2008

MedPAC%20Policy%202008.jpgThe Medicare Payment Advisory Commission (MedPAC) - the influential independent Congressional agency charged with advising Congress on a wide range of Medicare policy issues - has released its Medicare payment policy recommendations for 2009. The 355-page report includes a weath of information for those tracking Medicare provider or health plan issues, particularly annual provider payment updates, reforms to Medicare Advantage, and quality incentives.


In summary, here are MedPAC's recommendations to Congress:


Hospital Inpatient and Outpatient Services:


  • Increase Medicare payment rates for the acute inpatient and outpatient prospective payment systems in 2009 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.


  • Reduce the indirect medical education adjustment in 2009 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the indirect medical education adjustment should be used to fund a quality incentive payment program.


    • Physician Services:


  • Update Medicare Part B payments for physician services in 2009 by the projected change in input prices less MedPAC's adjustment for productivity growth.


  • Enact legislation requiring the Centers for Medicare and Medicaid Services (CMS) to establish a process for measuring and reporting physician resource use on a confidential basis for a period of two years.


    • Outpatient Dialysis Services:


  • Update the Medicare composite rate in CY 2009 by the projected rate of increase in the end-stage renal disease market basket index less MedPAC's adjustment for productivity growth.


  • MedPAC reiterated its recommendation that the Congress implement a quality incentive program for physicians and facilities that treat dialysis patients.


    • Skilled Nursing Facility Services:


  • Eliminate the update to Medicare payment rates for skilled nursing facility services for FY 2009.


  • Establish a quality incentive payment policy for skilled nursing facilities in Medicare.


  • To improve quality measurement for skilled nursing facilities, the Secretary of Health and Human Services should (a) add the risk-adjusted rates of potentially avoidable re-hospitalizations and community discharge to its publicly reported post-acute care quality measures; (b) revise the pain, pressure ulcer, and delirium measures currently reported on CMS's Nursing Home Compare website; and (c) require skilled nursing facilities to conduct patient assessments at admission and discharge.


    • Home Health Services:


  • Eliminate the update to Medicare payment rates for home health care services for CY 2009.


    • Inpatient Rehabilitation Facility Services:


  • The update to payment rates for Medicare inpatient rehabilitation facility services should be eliminated for FY 2009.


    • Long-Term Care Hospital Services:


  • Update Medicare payment rates for long-term care hospitals for rate year 2009 by the projected rate of increase in the rehabilitation, psychiatric, and long-term care hospital market basket index less MedPAC's adjustment for productivity growth.


    • Medicare Advantage Special Needs Plans:


  • Establish additional, tailored performance measures for Medicare special needs plans (SNPs) and evaluate their performance on those measures within three years.


  • Furnish beneficiaries and their counselors with information on special needs plans that compares their benefits, other features, and performance with other Medicare Advantage plans and traditional fee-for-service Medicare.


  • Require chronic condition special needs plans to serve only beneficiaries with complex chronic conditions that influence many other aspects of health, have a high risk of hospitalization or other significant adverse health outcomes, and require specialized delivery systems.


  • Require dual-eligible special needs plans within three years to contract, either directly or indirectly, with states in their service areas to coordinate Medicaid benefits.


  • Require special needs plans to enroll at least 95% of their members from their target population.


  • Eliminate dual-eligible and institutionalized beneficiaries' ability to enroll in Medicare Advantage plans, except special needs plans with state contracts, outside of open enrollment. They should also continue to be able to disenroll and return to fee-for-service at any time during the year.


  • Extend the authority for Medicare special needs plans that meet the above conditions.


    • Part D Enrollment, Benefit Offerings, and Drug Plan Payments:


  • Make Medicare Part D claims data available regularly and in a timely manner to congressional support agencies (e.g., GAO, CBO) and selected executive branch agencies (e.g., OIG) for purposes of program evaluation, public health, and safety.


    • Medicare Savings Programs and Part D Low-Income Drug Subsidy:


  • Increase State Health Insurance Assistance Program funding for outreach to low-income Medicare beneficiaries.


  • Raise Medicare Savings Program income and asset criteria to conform to Part D low-income drug subsidy criteria.


  • Change program requirements so that Social Security Administration screens low-income drug subsidy applicants for federal Medicare Savings Program eligibility and enrolls them if they qualify.


    • To read the full MedPAC report, click here (large PDF file).

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    Consider This
    In ancient China, physicians were paid only when their patients were kept well and often not paid if the patient got sick. If a patient died, a special lantern was hung outside the doctor's house. Upon each death, another lantern was added. This is the first known use of the two most powerful drivers for health care performance - incentives and transparency.
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