On March 13, 2015, the Medicare Payment Advisory Commission (MedPAC) issued its annual report to the Congress on Medicare payment policies (Report).  The Report includes recommendations for inflation updates and payment policies for nine Medicare payments systems for 2016. 

MedPAC’s recommendations include, among others:

Long-Term Care Hospitals (LTCHs)

MedPAC explains that payment rates differ for similar patients in acute care hospitals and LTCHs, and that LTCHs are currently paid significantly higher rates than acute care hospitals.  Accordingly, MedPAC recommends a new criterion for patients receiving higher level LTCH payments.  Specifically, MedPAC recommends that chronically critically ill (CCI) patients (defined as those who spent eight or more days in an intensive care unit during an immediately preceding acute care hospital stay) should continue to qualify for the relatively high LTCH payment rates.  However, under MedPAC’s recommendation, non-CCI patients at LTCHs would receive inpatient prospective payment system (IPPS) standard payment rates.  MedPAC further explains that the reduction in LTCH rates for non-CCI cases would generate savings that would be transferred to acute care hospitals in the form of higher outlier payments for the most costly CCI cases. 

Site-Neutral Payments for IRFs and SNFs

MedPAC recommends site-neutral payments for certain conditions between two post-acute care sectors: skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs).  MedPAC explains that this recommendation “builds on [its] past recommendations for site-neutral payments between hospital outpatient departments and physicians’ offices for certain services, and for consistent payment between acute care hospitals and long-term care hospitals for certain classes of patients.”  MedPAC further explains that “site-neutral payments that base the payment rate on the less costly sector can save money for Medicare, reduce cost sharing for beneficiaries, and reduce the incentive to provide services in the higher paid sector, without compromising beneficiary access to care or health outcomes.”  MedPAC recommends that the reductions to IRF payments be phased in over three years.

Primary Care Incentive Payment Program

Medicare’s Primary Care Incentive Payment Program (PCIP) is set to expire at the end of 2015.  The PCIP provides a 10 percent bonus payment on fee schedule payments for primary care services provided by eligible primary care practitioners.  While MedPAC recommends that the additional payments to primary care practitioners continue, it also recommends that the additional payments be in the form of a per-beneficiary payment.  MedPAC suggests this would be a step away from the fee-for-service payment approach and toward beneficiary-centered payments that encourage care coordination.

The MedPAC Report is available by clicking here.