MedPAC recommends 5% payment cut to home health agencies, inpatient rehab facilities

The Medicare Payment Advisory Commission is recommending 5 percent payment cuts to home health agencies and inpatient rehabilitation facilities and no increases next year for long-term care hospitals, hospices, ambulatory surgical centers and skilled nursing facilities.

The bipartisan, 17-member commission recommends freezing skilled nursing facility payment rates for two years while the payment system is revised.

MedPAC said in its report to Congress Wednesday that payment changes would ideally bring all types of post-acute care into a unified payment system.

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"For years, the commission has noted that PAC (post-acute care) payment systems do not encourage efficient care and are not equitable across different patient stays," the report said.

Commissioners want to stop the practice of Medicare paying more for the same service done in a hospital outpatient department that is done in a physician's office.

MedPAC said it wanted to provide consistent incentives across settings for providers to be efficient and cut costs.

They also recommended requiring ambulatory surgical centers to submit cost data, eliminating therapy visits as a factor in payment, and expanding the inpatient rehabilitation facility outlier pool for high-cost enrollees.

In 2015, fee-for-service program spending on post-acute care services totaled $60 billion, according to the report.

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Implementing its recommendations would reduce fee-for-service program spending by over $30 billion over the next 10 years, the report said.

If Congress had implemented the commission's 2008 recommendations for skilled nursing facilities and home health agencies, spending would have been reduced by about $11billion between 2009 and 2016, it said.

They recommend Congress update the inpatient and outpatient payments by the amounts specified by law, that hospitals add a modifier on claims for all services provided at off-campus stand-alone emergency department facilities, and that Congress increase payment rates for physician and other health professional services by the amount specified in the current law for 2018.

MedPAC also said Congress should increase the outpatient dialysis base payment rate by the update specified in current law for 2018.

In Medicare Advantage, MedPAC said Health and Human Services should calculate benchmarks using fee-for-service spending data only for beneficiaries enrolled in both Part A and Part B.

MA enrollees are required to be enrolled in both Parts A and B. However, MA benchmarks are currently based on the Medicare spending of all fee for service beneficiaries.

This creates a disconnect between the enrollment status of people in MA and the status of the beneficiaries used to calculate the Medicare Advantage benchmarks, MedPAC said.

MedPAC findings show that in 2015, a risk score for an MA enrollee tended to be about 4 percent higher than the risk score that beneficiary would have had in fee for service, even after accounting for the adjustment for coding intensity.

MedPAC's recommendation to ensure equity between fee-for-service and the Medicare Advantage program and equity across MA plans, would increase spending in Medicare, but that added spending could be offset with many of the commission's prior recommendations for the MA program, the report said.

In 2016, MA enrollment increased by 5 percent to 17.5 million beneficiaries or 31 percent of all Medicare enrollees. The average beneficiary was able to choose from 18 Medicare Advantage plans in 2017.

Twitter: @SusanJMorse