MedPAC May Stop Covering “Low Value” Procedures

The Medicare Payment Advisory Commission (MedPAC) is considering a plan that would stop covering “low value” procedures and tests due to their return on investment being too low. The procedures cost Medicare nearly $6 billion a year but yield little benefit, according to panel members. MedPAC came to this decision after exploring the results of 2012 analysis that found $5.8 billion in claims were paid that year for “low value procedures,” including a computed tomography for lung cancer and a prostate-specific antigen test for prostate cancer. As an alternative, MedPAC might consider charging beneficiaries more for low value services. MedPAC leaders say the cost of these procedures “subtract from the availability of public resources for high-value services and ‘appropriate subsidies’ for low-income people.”

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NAHC: MedPAC Discusses Inclusion Of Hospice In Post-Hospital “Transfer” Policy

The Medicare Payment Advisory (MedPAC) has recently been examining concerns related to hospitals’ increased use of “observation status” in response to Recovery Audit Contractors (RAC) reviews of appropriateness of use of short-term inpatient stays. MedPAC plans to develop new recommendations to ease tensions between hospitals and RACs relative to short-stay hospital admission policies. MedPAC is also looking at policies that would yield savings to offset the cost of the recommendations. One option is to include hospice in the post-acute hospital transfer policy. MedPAC estimates that hospitals currently have an 88 percent financial margin on patients that are discharged “early” to hospice. If a post-hospital transfer policy were to be applied to early discharges to hospice, MedPAC estimates that hospital financial margins on short-stay patients discharged to hospital would be about 31 percent.  NAHC has expressed concerns regarding the inclusion of hospice in the post-acute hospital transfer policy and believe it could have a negative impact on hospice patients and the Medicare program.

NAHC is seeking input from its hospice member organizations on this issue. If you have comments about the potential impact that inclusion of hospice in Medicare’s post-acute transfer policy could have on hospices, their patients, or the Medicare program generally, please email to NAHC by COB March 3, 2015.  

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MedPAC Proposes Eliminating Observation Stays

During a meeting last week, members of the Medicare Payment Advisory Commission (MedPAC) proposed eliminating observation status, declaring it ineffective in classifying hospital patients. Medicare will only cover skilled nursing services after a beneficiary spends three days as a hospital inpatient and any time spent in observation is not counted toward this threshold. In 2012, 11,000 hospital stays ended with a non-covered discharge to a skilled nursing facility.

However, other members of MedPAC believe that making observation stays into inpatient stays “could wreak havoc with billing procedures and increase costs for beneficiaries.” Other remedies for the surge in observation stays include having MedPAC focus their oversight more strictly on hospitals that have a high percentage of one-day inpatient stays and changing the three-day requirement for skilled nursing coverage.

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More Medicare Star Ratings Coming Soon

Hospital groups, home healthcare agencies and other providers are saying that the new five-star rating system CMS plans to apply to them is going to confuse consumers rather than help them meaningfully compare providers’ quality and safety. Recently, the star system used by CMS to rate nursing homes and physician groups has “come under fire” for lacking rigor. The American Hospital Association and the Medicare Payment Advisory Commission (MedPAC) also argue that an extended timeline and comment period is needed to address key concerns over methodology. However, advocates for patients and large employers argue that ratings add transparency and better tools to help consumers make informed choices.

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Site-Neutral Payments A Possibility For the Future

A new brief from Health Affairs and the Robert Wood Johnson Foundation explores the debate and proposals related to site-neutral payments. MedPAC is currently looking at proposals “that would explore reducing payment differences between inpatient rehabilitation facilities and skilled nursing facilities.” The brief states that while site-neutral payments are not definite, CMS and MedPAC have shown interest in “identifying and addressing situations where differences in payment are not considered appropirate.”

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Home Health Agencies May See Medicare Reimbursement Cuts Under New Policy

Home health agencies with high readmission rates may see their Medicare reimbursements cut due to a new policy proposed by the Medicare Payment Advisory Commission (MedPAC).  The new policy would save Medicare anywhere between $50 million and $250 million in 2015.  Some providers do not agree with the recommendation, believing it to be “too punitive.”  The recommendation will appear in its annual March report to Congress along with other recommendations to HHS which include implementing a common assessment protocol for home health agencies, SNFs, inpatient rehabilitation hospitals and LTC hospitals.

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MedPAC: Medicare Should Reduce SNF Payments 4%

In a recent report to Congress, the Medicare Payment Advisory Commission (MedPAC) recommended Medicare payments to skilled nursing facilities should be cut 4% in 2014 and steadily reduced in subsequent years. The council also advised a decrease in rates to achieve $10 billion in savings by 2018.

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