MedPAC Releases Payment Recommendations for Hospital Services

On January 14, the Medicare Payment Advisory Commission (“MedPAC”) released its 2017 payment recommendations to Congress for hospital inpatient and outpatient services. The commission’s recommendations would increase total spending on hospital services by 1.65 percent.

MedPAC voted to cut Medicare payments by 10 percent to safety net hospitals participating in the 340B Drug Discount Program, reducing hospital savings under the program by 30 percent. The 340B Program offers discounted drugs to hospitals that treat a large percentage of Medicaid beneficiaries and uninsured patients. Savings from the 340B cuts would be redistributed to hospitals that provide care services without compensation.

The commission also voted to base the distribution of uncompensated care payments under the disproportionate share hospital program on Schedule S-10 data from hospitals’ Medicare cost reports. MedPAC recommended that Congress eliminate updates to ambulatory surgical center payment rates and require them to submit cost data in 2017.

CMS Releases Names of New Medicare ACO Participants

On January 11, CMS announced 121 new Medicare Accountable Care Organization (“ACO”) participants. The agency’s ACO program, which now includes 477 organizations across five different models, is intended to lower health care costs and improve the quality of care that patients receive by holding providers accountable for certain quality and performance measures.

Twenty-one provider groups will participate in the Next Generation ACO model, which introduces a prospectively set benchmark and tests beneficiary incentives, including increased availability of telehealth services, for seeking care from participating providers. The Next Generation model allows providers to take on up to 100 percent of financial risk to share in more of the model’s savings through better care coordination and management.

CMS also announced 39 ACOs that will participate in the ACO Investment Model, which is expected to provide $83 million in investments to participants. The model builds on the Advance Payment and Shared Savings Program ACOs to transition to arrangements with higher financial risk and encourage new ACOs to form in rural, underserved areas. The agency’s report shows that 64 of the 477 participating ACOs are accepting higher risks and penalties for the opportunity to gain bigger bonuses.

Obama Calls for More Federal Support for Medicaid Expansion After 2016

On February 9, President Obama will release his administration’s annual budget proposal that asks Congress to provide states more time to benefit from full federal financing of Medicaid expansion. Under current health care law, the federal government is required to pay all coverage costs for people who became eligible for Medicaid through an expansion between 2014 and 2016. Beginning in 2017, federal funding for Medicaid expansion will be phased down, and states must pay for five percent of the expenses. In 2020, states will be required to pick up ten percent of the costs for enrollees eligible under expansion.

In a White House blog post released on January 14, the administration indicated that Obama’s proposal would allow states that were slow to take up the Medicaid expansion option the same three years of full federal funding and a gradual phase down as states that expanded in 2014 received, no matter when the state decides to expand.

The president’s proposal could increase federal support for states that have not yet expanded Medicaid and those that lost a year or two of federal financing when they expanded in 2015 or 2016. However, Republicans in Congress are unlikely to allow for extra federal funding for states expanding Medicaid and recently passed legislation to repeal the ACA altogether, which Obama vetoed.

Slavitt Says EHR Meaningful Use Program to End in 2016

On January 11, acting CMS Administrator Andy Slavitt told a crowd in San Francisco that the meaningful use program will be ending sometime in 2016. The meaningful use program, which had been criticized by lawmakers and health care stakeholders, was intended to incentivize the use of electronic health records. “The meaningful use program as it has existed will effectively be over and replaced with something better,” Slavitt said on Monday. What the replacement will be is uncertain, but most believe it will be tied to implementation of the Medicare Access and CHIP Reauthorization Act of 2015 and include streamlining various quality reporting programs.  In October of last year, CMS announced that Stage 3 of the meaningful use program would begin as early as 2017, but that no longer appears to be the case.

Health-Related Bills Introduced This Week

Rep. Richard Hudson (R-NC) introduced a bill (H.R. 4365) that seeks to clarify existing law to allow emergency medical responders to administer controlled substances under the supervision of a physician. Specifically, the bill is intended to clarify that the current practice of physician medical directors overseeing care provided by paramedics and other emergency medical service practitioners through “standing orders” is statutorily allowed and protected.

Next Week in Washington 

The Senate returns next week while the House is out of session for Martin Luther King, Jr. Day. The Senate will begin work on putting together a budget resolution that Senate leadership hopes to have in place by the end of March.