The Medicare Payment Advisory Commission (MedPAC) has issued its annual recommendations to Congress on updates to Medicare fee-for-service payment system rates, many of which overlap recommendations made in previous years. For instance, MedPAC continues to call for implementation of a unified prospective payment system (PPS) for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs), to be implemented beginning in 2021. In the latest report, MedPAC recommends that Congress direct the Secretary of Health and Human Services to begin blending the relative weights of the setting-specific payment systems and the unified PAC PPS in 2019. At the same time, MedPAC recommends that Congress modify the updates for the individual PAC systems by:

  • Reducing home health payment rates by 5% in 2019, rebasing payments beginning in 2020, and eliminating the use of the number of HHA therapy visits as a factor in payment determinations.
  • Reducing Medicare IRF PPS rates by 5% for FY 2019.
  • Eliminating the LTCH PPS update for FY 2019.
  • Eliminating SNF PPS market basket increases for fiscal years (FYs) 2019 and 2020, and implementing previous recommendations to reform SNF PPS payments in a way that shifts payments to medically-complex stays. MedPAC notes that it has endorsed SNF PPS reforms since 2008, and it “has grown increasingly frustrated with the lack of statutory and regulatory actions to lower the level of payments and implement a revised payment system.”

MedPAC also includes detailed discussions of Medicare payment for physician and other health professional services. MedPAC recommends increasing physician fee schedule rates in 2019 by the amount specified in current law (0.25%). MedPAC also offers extensive recommendations for revising the framework for updating Medicare physician payments established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Most notably, MedPAC recommends eliminating the Merit-based Incentive Payment System (MIPS) and adopting a new voluntary value program under which: (1) clinicians can elect to be measured as part of a voluntary group; and (2) clinicians in voluntary groups can qualify for a value payment based on their group’s performance on a set of population-based measures. Additionally, MedPAC presents the findings of its Congressionally-mandated report on coverage of telehealth services.

With regard to other Medicare fee-for-service payment systems, MedPAC recommends:

  • Increasing inpatient and outpatient hospital payments by the amount specified in current law (MedPAC currently projects a 1.25% hospital update for 2019).
  • Eliminating the ambulatory surgical center (ASC) and hospice payment updates for 2019 and requiring ASCs to submit cost data.
  • Increasing the outpatient dialysis base payment rate by the update specified in current law for 2019 (currently estimated to be 1.4%).

MedPAC also includes recommendations for the Medicare Advantage (MA) program and Medicare Part D prescription drug program, some of which were addressed in the recent Bipartisan Budget Act of 2018. Regarding MA plans, MedPAC recommends that the Secretary establish geographic areas for MA quality reporting that accurately reflect health care market areas, and calculate star ratings for each contract at that geographic level for public reporting and determining quality bonuses. Furthermore, MedPAC offers recommendations for MA quality ratings and bonuses in the case of MA contract consolidations.

Finally, MedPAC addresses treatment of biologics in the Part D coverage gap. While the Bipartisan Budget Act requires manufacturers to pay coverage gap discounts on prescriptions for biosimilars dispensed in 2020 and thereafter, MedPAC recommends that these discounts be excluded from enrollees’ true out-of-pocket spending.