MedPAC calls for 2% bump to hospital payments, no update for docs in 2022

MedPAC March 2019 Report to the Congress Released - ehospice

A key Medicare advisory panel is calling for a 2% bump to Medicare payments for acute care hospitals for 2022 but no hike for physicians.

The report, released Monday from the Medicare Payment Advisory Commission (MedPAC)—which recommends payment policies to Congress—bases payment rate recommendations on data from 2019. However, the commission did factor in the pandemic when evaluating the payment rates and other policies in the report to Congress, including whether policies should be permanent or temporary.

“The financial stress on providers is unpredictable, although it has been alleviated to some extent by government assistance and rebounding service utilization levels,” the report said.

MedPAC recommended that targeted and temporary funding policies are the best way to help providers rather than a permanent hike for payments that gets increased over time.

“Overall, these recommendations would reduce Medicare spending while preserving beneficiaries’ access to high-quality care,” the report added.

MedPAC expects the effects of the pandemic, which have hurt provider finances due to a drop in healthcare use, to persist into 2021 but to be temporary.

It calls for a 2% update for inpatient and outpatient services for 2022, the same increase it recommended for 2021.

The latest report recommends no update for physicians and other professionals. The panel also does not want any hikes for four payment systems: ambulatory surgical centers, outpatient dialysis facilities, skilled nursing facilities and hospices.

MedPAC also recommends Congress reduce the aggregate hospice cap by 20% and that “ambulatory surgery centers be required to report cost data to [Centers for Medicare & Medicaid Services (CMS)],” the report said.

But it does call for long-term care hospitals to get a 2% increase and to reduce payments by 5% for home health and inpatient rehabilitation facilities.

The panel also explores the effects of any policies implemented under the COVID-19 public health emergency, which is likely to extend through 2021 and could continue into 2022.

For instance, CMS used the public health emergency to greatly expand the flexibility for providers to be reimbursed for telehealth services. Use of telehealth exploded during the pandemic after hesitancy among patients to go to the doctor’s office or hospital for care.

“Without legislative action, many of the changes will expire at the end of the [public health emergency],” the report said.

MedPAC recommends Congress temporarily continue some of the telehealth expansions for one to two years after the public health emergency ends. This will give lawmakers more time to gather evidence on the impact of telehealth on quality and Medicare spending.

“During this limited period, Medicare should temporarily pay for specified telehealth services provided to all beneficiaries regardless of their location, and it should continue to cover certain newly-covered telehealth services and certain audio-only telehealth services if there is potential for clinical benefit,” according to a release on the report.

After the public health emergency ends, Medicare should also return to paying the physician fee schedule’s facility rate for any telehealth services. This will ensure Medicare can collect data on the cost for providing the services.

“Providers should not be allowed to reduce or waive beneficiary cost-sharing for telehealth services after the [public health emergency],” the report said. “CMS should also implement other safeguards to protect the Medicare program and its beneficiaries from unnecessary spending and potential fraud related to telehealth.”

Medicare Cuts Payment to 774 Hospitals Over Patient Complications

A man in a hospital gown sits on a hospital bed

The federal government has penalized 774 hospitals for having the highest rates of patient infections or other potentially avoidable medical complications. Those hospitals, which include some of the nation’s marquee medical centers, will lose 1% of their Medicare payments over 12 months.

The penalties, based on patients who stayed in the hospitals anytime between mid-2017 and 2019, before the pandemic, are not related to covid-19. They were levied under a program created by the Affordable Care Act that uses the threat of losing Medicare money to motivate hospitals to protect patients from harm.

On any given day, one in every 31 hospital patients has an infection that was contracted during their stay, according to the Centers for Disease Control and Prevention. Infections and other complications can prolong hospital stays, complicate treatments and, in the worst instances, kill patients.

“Although significant progress has been made in preventing some healthcare-associated infection types, there is much more work to be done,” the CDC says.

Now in its seventh year, the Hospital-Acquired Condition Reduction Program has been greeted with disapproval and resignation by hospitals, which argue that penalties are meted out arbitrarily. Under the law, Medicare each year must punish the quarter of general care hospitals with the highest rates of patient safety issues. The government assesses the rates of infections, blood clots, sepsis cases, bedsores, hip fractures and other complications that occur in hospitals and might have been prevented. The total penalty amount is based on how much Medicare pays each hospital during the federal fiscal year — from last October through September.

Hospitals can be punished even if they have improved over past years — and some have. At times, the difference in infection and complication rates between the hospitals that get punished and those that escape punishment is negligible, but the requirement to penalize one-quarter of hospitals is unbending under the law. Akin Demehin, director of policy at the American Hospital Association, said the penalties were “a game of chance” based on “badly flawed” measures.

Some hospitals insist they received penalties because they were more thorough than others in finding and reporting infections and other complications to the federal Centers for Medicare & Medicaid Services and the CDC.

“The all-or-none penalty is unlike any other in Medicare’s programs,” said Dr. Karl Bilimoria, vice president for quality at Northwestern Medicine, whose flagship Northwestern Memorial Hospital in Chicago was penalized this year. He said Northwestern takes the penalty seriously because of the amount of money at stake, “but, at the same time, we know that we will have some trouble with some of the measures because we do a really good job identifying” complications.

Other renowned hospitals penalized this year include Ronald Reagan UCLA Medical Center and Cedars-Sinai Medical Center in Los Angeles; UCSF Medical Center in San Francisco; Beth Israel Deaconess Medical Center and Tufts Medical Center in Boston; NewYork-Presbyterian Hospital in New York; UPMC Presbyterian Shadyside in Pittsburgh; and Vanderbilt University Medical Center in Nashville, Tennessee.

There were 2,430 hospitals not penalized because their patient complication rates were not among the top quarter. An additional 2,057 hospitals were automatically excluded from the program, either because they solely served children, veterans or psychiatric patients, or because they have special status as a “critical access hospital” for lack of nearby alternatives for people needing inpatient care.

The penalties were not distributed evenly across states, according to a KHN analysis of Medicare data that included all categories of hospitals. Half of Rhode Island’s hospitals were penalized, as were 30% of Nevada’s.

All of Delaware’s hospitals escaped punishment. Medicare excludes all Maryland hospitals from the program because it pays them through a different arrangement than in other states.

Over the course of the program, 1,978 hospitals have been penalized at least once, KHN’s analysis found. Of those, 1,360 hospitals have been punished multiple times and 77 hospitals have been penalized in all seven years, including UPMC Presbyterian Shadyside.

The Medicare Payment Advisory Commission, which reports to Congress, said in a 2019 report that “it is important to drive quality improvement by tying infection rates to payment.” But the commission criticized the program’s use of a “tournament” model comparing hospitals to one another. Instead, it recommended fixed targets that let hospitals know what is expected of them and that don’t artificially limit how many hospitals can succeed.

Although federal officials have altered other ACA-created penalty programs in response to hospital complaints and independent critiques — such as one focused on patient readmissions — they have not made substantial changes to this program because the key elements are embedded in the statute and would require a change by Congress.

Boston’s Beth Israel Deaconess said in a statement that “we employ a broad range of patient care quality efforts and use reports such as those from the Centers for Medicare & Medicaid Services to identify and address opportunities for improvement.”

UCSF Health said its hospital has made “significant improvements” since the period Medicare measured in assessing the penalty.

“UCSF Health believes that many of the measures listed in the report are meaningful to patients, and are also valid standards for health systems to improve upon,” the hospital-health system said in a statement to KHN. “Some of the categories, however, are not risk-adjusted, which results in misleading and inaccurate comparisons.”

Cedars-Sinai said the penalty program disproportionally punishes academic medical centers due to the “high acuity and complexity” of their patients, details that aren’t captured in the Medicare billing data.

“These claims data were not designed for this purpose and are typically not specific enough to reflect the nuances of complex clinical care,” the hospital said. “Cedars-Sinai continually tracks and monitors rates of complications and infections, and updates processes to improve the care we deliver to our patients.”

‘Really difficult nut to crack’: MedPAC torn over telehealth regs post-COVID-19

https://www.healthcaredive.com/news/really-difficult-nut-to-crack-medpac-torn-over-telehealth-regs-post-covi/593466/

Dive Brief:

  • Members of an influential congressional advisory committee on Medicare are torn on how best to regulate telehealth after the COVID-19 public health emergency, hinting at the difficulty Washington faces as it looks to impose guardrails on virtual care without restricting its use after the pandemic ends.
  • During a Thursday virtual meeting, the Medicare Payment Advisory Commission expressed its support of telehealth broadly, but many members noted snowballing use of the new modality could create more fraud and abuse in the system down the line.
  • Key questions of how much Medicare reimburses for telehealth visits and what type of visits are paid for won’t be easily answered, MedPAC commissioners noted. “This is a really, really difficult nut to crack,” Michael Chernew, MedPAC chairman and a healthcare policy professor at Harvard Medical School, said.

Dive Insight:

Virtual care has kept much of the industry running during the coronavirus pandemic, allowing patients to receive needed care at home. Much of this was possible due to the declaration of a public health emergency early 2020, allowing Medicare to reimburse for a greater swath of telehealth services and nixing other restrictions on virtual care.

However, much of that freedom is only in place for the duration of the public health emergency, leaving regulators and legislators scrambling to figure which new flexibilities they should codify, and which perhaps are best left in the past along with COVID-19.

It’s a tricky debate as Washington looks to strike a balance between keeping access open and costs low.

In a Thursday meeting, MedPAC debated a handful of policy proposals to try and navigate this tightrope. Analysts floated ideas like making some expansions permanent for all fee-for-service clinicians; covering certain telehealth services for all beneficiaries that can be received in their homes; and covering telehealth services if they meet CMS’ criteria for an allowable service.

But many MedPAC members were wary of making any concrete near-term policy changes, suggesting instead the industry should be allowed to test drive new telehealth regulations after COVID-19 without baking them in permanently. 

I don’t think what we’ve done with the pandemic can be considered pilot testing. I think a lot of this is likely to go forward no matter what we do because the gate has been opened, and it’s going to be really hard to close it,” Marjorie Ginsburg, founder of the Center for Healthcare Decisions, said. But “I see this just exploding into more fraud and abuse than we can even begin imagining.”

Paul Ginsburg, health policy chair at the Brookings Institution, suggested a two-year pilot of any changes after the public health emergency ends.

However, it would be “regressive” to roll back all the gains virtual care has made over the past year, according to Jonathan Perlin, CMO of health system HCA.

“These technologies are such a part of the environment that at this point, I fear [it] would be anachronistic not to accept that reality,” Perlin said.

Among other questions, commissioners were split on how much Medicare should pay for telehealth after the pandemic ends. 

That parity debate is perhaps the biggest question mark hanging over the future of the industry. Detractors argue virtual care services involve lower practice costs, as remote physicians not in an office don’t need to shell out for supplies and staff. Paying at parity could distort prices, and cause fee-for-service physicians to prioritize delivering telehealth services over in-person ones, some commissioners warned.

Other MedPAC members pointed out a lower payment rate could stifle technological innovation at a pivotal time for the healthcare industry.

MedPAC analysts suggested paying lower rates for virtual care services than in-person ones, and paying less for audio-only services than video.

Commissioners agreed audio-only services should be allowed, but that a lower rate was fair. Commissioner Dana Gelb Safran, SVP at Well Health, suggested CMS should consider outlining certain services where video must be used out of clinical necessity.

Previously, telehealth services needed a video component to be reimbursed. Proponents argue expanded access to audio-only services will improve care access, especially for low-income populations that might not have the broadband access or technology to facilitate a video visit.

Another major concern for commissioners is how permanently expanding telehealth access would affect direct-to-consumer telehealth giants like Teladoc and Amwell. If all telehealth services delivered at home are covered, that could allow the private companies to “really take over the industry,” Larry Casalino, health policy chief in the Weill Cornell Department of Healthcare Policy and Research, said.

Because of the lower back-end costs for virtual care than in-office services, paying vendors the same rate as in-office physicians could drive a lot of brick-and-mortar doctors out of business, commissioners warned.

MedPAC to recommend 2% payment boost for hospitals next year

MedPAC approves 2021 payment recommendations | AHA News

The Medicare Payment Advisory Commission voted Jan. 14 to recommend a 2 percent raise in Medicare payments for hospitals next year.

The commission said it wants to give the payment boost to both acute-care and long-term care hospitals. The 2 percent payment increase will result in about a $750 million to $2 billion increase in acute-care hospital spending for Medicare and about $50 million for long-term care hospitals.  

MedPAC also plans to recommend no change to the payment rate for physicians in 2022 and a 5 percent decrease for home health firms and inpatient rehabilitation centers. 

Although MedPAC will recommend the payment boost, Congress is not required to implement the recommendation.

The vote occurred at MedPAC’s January public meeting. 

For-profit systems fare better than nonprofits in weathering COVID-19 cash crisis, MedPAC says

https://www.fiercehealthcare.com/hospitals/medpac-for-profit-systems-do-better-job-than-nonprofits-weathering-covid-19-cash-crisis?mkt_tok=eyJpIjoiTlRJM05qVmhOVEptWm1ZNSIsInQiOiJaRHlaWHpyaHVZUHlvTFwvZmRaZDZKUVY2aEJka25ncStYSmcxZXo3bTR5TzV3NFE0YzdpYlpGMGRrbUxkcWVYT0Z4ZTVMa0VPN3BuSElkMldQRXBpTk1pbnN1T3VoalNXd0JzTU9aYngwazltVXRud0hISVppZnF2OHU0bFwvVzN6In0%3D&mrkid=959610

For-profit health systems have been better able to weather a financial crisis caused by COVID-19 than their nonprofit counterparts because they could reduce more expenses, a new analysis from the Medicare Payment Advisory Commission finds.

The analysis released Thursday during MedPAC’s monthly meeting comes as providers struggle to recover from low patient volumes stemming from the COVID-19 pandemic. The report also explored how physician offices have fared.

Hospitals faced a massive dip in patient volume in March and April at the onset of the pandemic, which forced facilities to cancel or delay elective procedures. Patient volumes have since recovered to near pre-pandemic levels, MedPAC found.

But the recovery has been mixed depending on the hospital system.

MedPAC looked at earnings for three large nonprofit systems in the U.S. and four large for-profit systems in the second quarter and found a variation in how they handled the decline in revenue.

Aggregate patient revenue for the nonprofit systems declined by $1.5 billion and this led to a $621 million loss for the systems in the second quarter compared to the same period in 2019. Overall the systems had operating profit margins ranging from negative 13% to positive 5%.

The four for-profit systems saw a $3.5 billion decline in patient revenue. However, the systems posted an increase of $634 million in operating income.

This led to a range of operating margin increases of 1 to 14% in the second quarter compared to 2019.

The for-profit systems got more relief funding ($1.9 billion compared with $782 million) from a $175 billion federal provider relief fund created by the CARES Act.

But the biggest difference between for-profit and nonprofit systems was how they handled expenses.

“For-profit systems substantially reduced expenses in the second quarter, in aggregate reduced by $2.3 billion and that made up for lost revenue,” said Jeff Stensland, a MedPAC staff member, during the meeting.

Nonprofit systems only saw a $13 million decline in expenses.

The analysis comes as some larger for-profit systems like HCA Healthcare generate profits in the second quarter, while nonprofit systems such as Providence posted losses.

MedPAC did not name the systems that it analyzed nor did it delve into what expenses were reduced and how.

Some systems have taken to furloughing employees but all systems have faced increased expenses for personal protective equipment and some staff.

The analysis also looked at the financial impact of the pandemic on physician offices. MedPAC found that federal grants, loans and payment increases offset a majority of the revenue lost in March and May due to patient volume declines.

MedPAC estimated physician offices lost between $45 to $55 billion. However, offices got $26 billion in loans from the Paycheck Protection Program, which don’t have to be repaid if the majority of the funds go to payroll.

Physician offices also received $5 billion out of the $175 billion provider relief fund passed as part of the CARES Act.

Physicians also got $1 billion in savings from the temporary suspension of a 2% decline in Medicare payments created under sequestration.

 

 

 

Congress Should Redirect The Medicare Shared Savings Program To Address The COVID-19 Emergency

https://www.healthaffairs.org/do/10.1377/hblog20200518.386084/full/?utm_source=Newsletter&utm_medium=email&utm_content=COVID-19%3A+Redirecting+The+Medicare+Shared+Savings+Program%2C+The+Hidden+Homeless%2C+Senior+Housing+Communities+Need+Support%3B+Reimagining+Involuntary+Commitment%3B+Book+Reviews&utm_campaign=HAT+5-22-20

Congress Should Redirect The Medicare Shared Savings Program To ...

The COVID-19 virus has unleashed a rolling series of crises among fee-for-service providers. First, and most directly affected, providers in areas with major outbreaks have suffered extreme personal hardship and risked infection themselves with inadequate equipment and protective gear when treating patients. Second, everywhere in the country, physician practices and hospitals have seen revenue drops from 20 percent to 60 percent due to the need to follow social distancing practices to minimize infection. This revenue collapse has perversely resulted in staffing reductions that are likely to accelerate unless Congress provides further assistance to the industry. Third, and only partially observed so far, there is a pending “second wave” of health crises discernible in the “missing heart attacks” and reports from nephrologists and oncologists of patients making difficult decisions about whether to continue necessary care. In some cases, emergency care has shifted out of the hospital, and some triage is conducted on the street to avoid risk of COVID-19 infection.

The COVID-19 public health emergency has generated a massive set of emergency changes in Medicare payment policy, loosening regulation of acute hospital care, dramatically expanding use cases for telehealth and other types of virtual care, and, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent relief legislation, releasing a $175 billion pool of money that attempts to prop up Medicare providers dependent on in-person, fee-for-service revenue. Now, with that first batch of changes handled, a debate has started among proponents of value-based purchasing as to the appropriate direction for the Medicare Shared Savings Program (MSSP) and other value-based initiatives during the emergency.

In this context, a number of stakeholders have begun to call on the Centers for Medicare and Medicaid Services (CMS) to modify existing MSSP parameters to maintain the program through the emergency. CMS has responded by eliminating downside risk for accountable care organizations (ACOs) for the duration of the public health emergency and taking COVID-19 costs out of ACO financial calculations. These are welcome changes but don’t completely address the serious problems ACO participants face. We urge a different focus—the federal government should charge these existing networks with addressing the “second wave” of health care needs going largely unaddressed, as patients with serious, non-COVID-19-related chronic conditions see procedures and visits postponed indefinitely. Commensurately, Congress should suspend all financial impacts from the MSSP for the duration of the public health emergency—and consider excluding any data from 2020 for performance years 2021 and beyond. We describe key elements of these changes in this post.

A Growing Call For MSSP Modifications

The Medicare Payment Advisory Commission (MedPAC) issued a comment letter urging CMS to allow ACO providers to focus on COVID-19, rather than shared savings. MedPAC, acknowledging the dramatic shifts in care delivery necessitated by the COVID-19 crisis, made several recommendations about treatment of savings and losses in the MSSP for 2020. MedPAC asked CMS not to use 2020 data for purposes of ACO quality, bonuses, and penalties. MedPAC would also have CMS disregard 2020 claims when assigning beneficiaries to ACOs, since a shift to telehealth, with physicians and patients potentially located far apart, could distort the ACO assignment with unintended effects. Finally, MedPAC recommended extending all ACO agreement periods, keeping everyone in the current risk arrangement for one year, a recommendation CMS adopted.

William Bleser and colleagues recently suggested immediate and short-term actions that could help preserve ACOs through this crisis. Their blog post identifies the decision point, coming on June 30, 2020, for ACOs to stay in the program and be accountable for losses in 2020. The impact of the emergency on ACOs will still be unclear at that time, and the authors recommend that CMS allow ACOs to completely opt out of downside risk for 2020 while accepting a capped amount of potential shared savings. Eliminating the downside and offering a limited upside might just convince ACOs not to leave the program entirely. CMS has taken these concerns seriously and removed all COVID-19–related costs from ACO financial calculations and eliminated shared losses during the public health emergency.  

Another recent blog post by Travis Broome and Farzad Mostashari makes the case that the population health focus and financial incentives for ACOs position them uniquely, not just to survive, but to lead the way for primary care during the COVID-19 crisis. ACO participation may protect these practices because of the program’s unique financial metrics. Unlike Medicare managed care, MSSP ACOs are measured against a benchmark that trends forward at actual regional and national spending growth rates. During an unusual spending year, as 2020 is sure to be, those factors are included in the trend, and the ACO is not heavily penalized for the spending pattern. Broome and Mostashari recommend that CMS focus on shielding primary care practices from certain quality reporting and information collection requirements to pave the way for high-quality care and solid financial performance.

A More Focused Re-Envisioning Of The MSSP

Foundational to the MSSP is an agreement between groups of providers and the federal government to align their financial relationship with patient and taxpayer goals: to improve the quality of care for their patients and reduce the growth of health care spending. Both of those elements must take a back seat during a massive public health emergency.

Reducing overall health care costs is not an appropriate consideration for providers today. Even though national and regional growth factors will track actual changes in expenditures and may allow for identification of more efficient providers, this objective is second order to directly responding to the threat of the emergency. Given the overwhelming need to respond to the COVID-19 crisis in their communities, the ability of any health system or ACO to influence costs this year is likely to be dwarfed by factors outside its control. This type of highly infectious, novel pandemic is a risk that can only be properly assumed by the federal government. Neither physician practices, nor hospitals, nor any other ACO participants can realistically budget and prepare for such an event on their own. Congress and CMS should adopt MedPAC’s suggestion to suspend charging penalties or paying bonuses for all of 2020, no matter how long the public health emergency is in effect.

Similarly, while the prevention and care management metrics embedded in the MSSP remain appropriate indicators directionally, difficulties in seeing patients for well visits and new standards for documentation during telehealth visits will make any precise differentiation of quality in primary care practices near impossible. MedPAC is correct that using 2020 data for performance evaluation would undercut the legitimacy of the program, and the commissioners are right to support the call to suspend the use of such data in establishing bonuses, penalties, and benchmarks in 2020 and beyond.

However, many practices have made significant investments in population health technology, staff, and training that remain as valuable as ever during this emergency. And the public has an interest in maintaining those staff and those skills, as the basis for a better health system in the future. All told, like much of the rest of the economy, putting the MSSP and other ACO arrangements “on ice” to allow providers to focus on near-term priorities would best serve the public interest. That includes delaying or freezing requirements to step up to higher-risk tracks in the Pathways to Success program, as well as delaying or canceling quality submission requirements. These delays, however, should be paired with public funding to reflect the work that ACOs have already undertaken, as well as work that they can do to help manage through the crisis, discussed further below.

Taking steps to preserve ACOs through 2020 is a good start, but we believe Congress and CMS should think bigger and empower ACOs to focus directly on the current crisis for the next two years.

Adapting ACOs To Serve The Current Emergency

ACOs are a valuable asset for the Medicare program, reflecting nearly 10 years of work across hundreds of thousands of providers serving tens of millions of beneficiaries. Disbanding them by indifference would be a mistake. The current collapse in fee-for-service volume is a problem of fee-for-service medicine primarily, and ACOs represent an infrastructure for a further step away from volume-focused medicine once the danger from this emergency passes.

Suspending financial considerations and consequences for the duration of the emergency is insufficient. Without the responsibility for managing risk and sharing in any savings, the ACO contract with CMS loses its organizing force, and the program becomes “a solution in search of a problem.”

We see two opportunities for ACOs to redirect their energies productively this year and next. First, ACOs should be directed to follow best practices in testing and public health data collection, in collaboration with local and state officials. Managing the spread of the virus in their communities is already a daily task for these providers; additional surveillance and data collection could be adopted and updated continuously as recommendations evolve. By providing resources to ACOs to support this work directly, CMS would help ensure providers can keep up.

Second, and perhaps more important in most of the country to date, ACOs should be charged with meeting explicit virtual care management requirements to identify, contact, and serve patients in their panel with multiple high-risk chronic diseases. These patients are underserved today, and efforts to address their needs are piecemeal. In place of the current financial incentives, we propose that CMS require ACOs to perform a variety of care management and COVID-19 surveillance functions in exchange for a care management fee. Congress could enable and CMS could specify that ACOs place 10 percent to 15 percent of their patients under virtual care management programs, for example, and require that ACOs maintain regular contact with these patients as well as others at higher risk. The 10 percent to 10 percent figure is a fairly low bar, considering that more than 60 percent of Medicare patients have multiple chronic conditions, according to CMS. Additionally, COVID-19 patients could be offered principal care management, a new service for Medicare beneficiaries with one serious health condition, for a month or more after their diagnosis. New flexibilities for remote patient monitoring and virtual care make this far easier to implement than it had been before the pandemic.

CMS could quickly adapt existing financial models to support this work, drawing from analysis and design of the Primary Care FirstComprehensive Primary Care Plus, and other care management programs. ACOs are by design collaborative and can rapidly learn and share best practices for establishing virtual care management services. Behavioral health services and outreach, as well as other valuable preventive care, could also be directly funded through this structure. As an alternative to the fee for care management and surveillance, Congress could allow ACOs to receive their 2019 shared savings amounts again for 2020, for ACOs continuously operating in each year.

Looking Ahead

The steps we have outlined here will accomplish several worthwhile ends in this crisis:

  • directly funding primary care capacity at a time when volumes are nosediving;
  • keeping the nearly 500,000 physician and other clinicians already in ACOs working together, maintaining the infrastructure that has already been built; and
  • providing upfront resources to manage patients whose conditions could deteriorate in the coming months, potentially catching them before they do.

These modifications should be executed first by Congress, not CMS, to ensure that such changes to the program do not become commonplace. This would invigorate the ACO programs by focusing them on the unique set of problems of this crisis, unencumbered by requirements better suited to peacetime than wartime. And when the war is over, these organizations can resume their longer-term mission to manage total costs and quality with all of the new tools and capabilities they have acquired during the crisis.

 

 

 

 

MedPAC’s report to Congress: 7 takeaways

https://www.beckershospitalreview.com/finance/medpac-s-report-to-congress-7-takeaways.html?utm_medium=email

Image result for MedPAC

The Medicare Payment Advisory Commission released its March 2020 report on Medicare payment policy to Congress, which includes a chapter analyzing the effects of hospital and physician consolidation in the healthcare sector.

Here are seven takeaways:

1. Medicare’s Insurance Trust Fund is likely to run out without changes. Trustees from Medicare estimate that the program’s Hospital Insurance Trust Fund, mostly funded through a payroll tax, will be depleted by 2026. To keep the fund solvent for the next 25 years, Medicare trustees advise that the payroll tax immediately be raised from 2.9 percent to 3.7 percent, or Part A spending to be reduced by 18 percent.

2. MedPAC recommends boosting payment rate for three sectors:

  • Hospitals. MedPAC recommended a 3.3 percent raise in Medicare payments for hospitals next year. The commission said it wants to give hospitals a 2 percent boost overall and tie the other 1.3 percent to quality metrics to motivate hospitals to reduce mortality and improve patient satisfaction. Currently, CMS has scheduled a 2.8 percent increase in 2021 Medicare payments.
  • Outpatient dialysis services. MedPAC recommended that the End Stage Renal Disease Prospective Payment System base payment rate is raised by the amount determined under current law. This is projected to be a boost of 2 percent
  • Long-term care hospitals. The commission recommended a 2 percent increase in the payment rates for long-term care hospitals in 2021.

3. MedPAC recommends unchanged payment rates for four sectors:

  • Physicians: Under current law, there is no update to the 2021 Medicare fee schedule base payment rate for physicians who treat Medicare patients. MedPAC is recommending that CMS keeps the physician rate the same as it is this year.
  • Surgery centers. MedPAC recommended eliminating an expected 2.8 percent payment rate bump for surgery centers next year. It said its decision was due to not having enough cost data from surgery centers.
  • Skilled nursing. MedPAC is recommending skilled nursing facilities receive no change to their base rate next year to better align payments with costs while exerting pressure on providers to keep their cost growth low.
  • Hospice. MedPAC recommends that the hospice payment rates in 2021 be held at their 2020 levels

4. MedPAC recommends payment rate reductions for two sectors: 

  • Home health. The commission recommended a 7 percent reduction in home health payment rates for 2021.
  • Inpatient rehabilitation hospitals. MedPAC is recommending that CMS reduce the payment rate to inpatient rehabilitation facilities by 5 percent for fiscal year 2021.

5. MedPAC builds on its recommendation to revamp quality programs. MedPAC is furthering its recommendation to replace Medicare’s four current hospital quality programs with a single hospital value incentive program. MedPAC said it believes that this recommendation would provide hospitals  higher aggregate payments than they would get under current law.

6. MedPAC’s findings on hospital and physician consolidation. MedPAC said that consolidation gives providers greater market power, which has a statistically significant association with higher profit margins for treating non-Medicare patients. Higher non-Medicare margins also are associated with higher standardized costs per discharge. But the direct association between market power and standardized costs per discharge is statistically insignificant, the commission found.

“The effect of consolidation on hospitals’ costs is not clear in theory or from our current analysis. From a theoretical standpoint, the merger of two hospitals could initially create some efficiencies and bargaining power with suppliers. But over time, higher prices from commercial payers could loosen hospitals’ budget constraints and lead to higher cost growth, thus offsetting any efficiency gains,” MedPAC’s report states.

7. MedPAC’s findings on the 340B Drug Discount Program. MedPAC was asked to analyze whether the availability of 340B drug discounts creates incentives for hospitals to choose more expensive products than they would without the program. MedPAC studied the effect of 340B market share on higher drug spending on cancer treatments between 2009 and 2017. The commission found that for two of the five cancer types studied, 340B participation boosted prices by about $300 per patient per month. However, the boost in spending attributed to 340B was much smaller than the general increase in oncology spending, which includes rising prices and the launch of new products with high drug prices. For example, cancer drug spending grew by more than $2,000 per patient month for patients with breast cancer, lung cancer, and leukemia/lymphoma.

“The MedPAC report released today uses rigorous analysis and finds little evidence 340B participation influences cancer drug spending. Modest differences may be attributable to the types of patients treated in 340B facilities. The safety-net hospitals that participate in the 340B drug-pricing program are essential providers of cancer care in this nation, especially to patients who are living with low incomes, those living with disabilities, and patients requiring more complex oncology care,” said Maureen Testoni, president and CEO of 340B Health, an association that represents more than 1,400 hospitals participating in the 340B program.

Access MedPAC’s full report here. 

 

 

 

 

MedPAC: 340B hospitals spent more on lung, prostate cancer drugs compared to other facilities

https://www.fiercehealthcare.com/hospitals-health-systems/medpac-340b-hospitals-spent-more-cancer-drugs-compared-to-other-facilities?mkt_tok=eyJpIjoiTTJaaE5EY3lZMlEzTVdZdyIsInQiOiI1UEZJUjBpbldUSVBteFl3OGpnd0FPRnIxMFJFUXIzSjE1YUJDMVdDSSsrdDlibDI1KzU5bXZsU1RIUjBZUWNPR2s1OTdwQXV5ZVY2cUhuWXkzYnpDWE55akhCczMxOVEyRWdpdkNYK1hKcjdIV01qNTdPemxyWkFVK1pDUmNzNyJ9&mrkid=959610

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Hospitals in the 340B drug discount program spent more on drugs for prostate and lung cancers compared to facilities not in the program, a new analysis found.

But the preliminary analysis from the Medicare Payment Advisory Commission (MedPAC) couldn’t find that the controversial program incentivizes hospitals to pursue higher-priced drugs. The analysis, released Friday as part of MedPAC’s monthly meeting, was requested by Congress on the program, which has faced major cuts by the Trump administration.

Some lawmakers have argued that 340B, which offers safety-net hospitals discounts on drugs, has not worked as intended and led to hospitals specifically choosing higher-priced drugs to get a big discount.

So MedPAC looked at the spending from 2013 to 2017 of 340B and non-340B hospitals as well as physicians’ offices for five types of cancers: breast, colorectal, prostate, lung and leukemia and lymphoma.

MedPAC’s analysis found that 340B hospitals spent between 2% and 5% higher on average on cancer drugs than non-340B hospitals. But there were mixed results when 340B hospitals were compared to physicians’ offices, with 340B facilities spending 1% lower to 7% higher than physicians’ offices on cancer drugs.

The reason 340B hospitals spent more on cancer drugs than hospitals not in the program was linked to two types of cancer: lung and prostate.

For lung cancer, a possible reason for the higher spending is that a larger share of patients in 340B hospitals received new immuno-oncology therapies that are more expensive, MedPAC said. Prostate cancer also had higher drug prices per unit for both drugs in Medicare Part B, which reimburses for physician-administered drugs, and Part D.

However, MedPAC staff cautioned they couldn’t conclude 340B is incentivizing the spikes in spending.

The reason is “we lack access to the discount data,” said MedPAC staffer Shinobu Suzuki at the commission’s meeting Friday in Washington, D.C.

MedPAC also didn’t find that gaining 340B status led to a spike in average cancer drug spending, suggesting that 340B discounts “may not have had any effects on them,” the report said.

The analysis also found that the higher cancer spending would likely have a small, if any, impact on cost sharing for Medicare patients depending on the type of cancer and supplemental coverage.

The study will be finalized and likely included in MedPAC’s March report to Congress. It comes with some caveats, including a small sample size and that it did not examine the impact of a 22.5% cut to 340B payments that went into effect in 2018.

The hospital industry has been fighting the Trump administration in court over the cuts, which the industry claims are unlawful.

Despite the caveats, MedPAC’s findings could play a major part in lawmaker deliberations on the program, which some Republicans claim has gotten too big and led to hospitals bilking the federal government.

The pharmaceutical industry has also led an extensive campaign to shed more light on the program. 340B requires pharmaceutical companies to provide discounts to safety-net hospitals in exchange for participating in Medicaid.

The Government Accountability Office has also called for greater oversight of 340B.

340B industry group 340B Health praised the findings.

“The thoughtful analysis MedPAC presented today sheds important light on the role 340B hospitals play in treating people living with cancer,” said Maureen Testoni, 340B Health president, in a statement.

 

MedPAC recommends 3.3% payment boost for hospitals in 2021

https://www.beckershospitalreview.com/finance/medpac-recommends-3-3-payment-boost-for-hospitals-in-2021.html?utm_medium=email

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The Medicare Payment Advisory Commission voted unanimously Jan. 16 to recommend a 3.3 percent raise in Medicare payments for hospitals next year.

The commission said it wants to give hospitals a 2 percent boost overall and tie the other 1.3 percent to quality metrics to motivate hospitals to reduce mortality and improve patient satisfaction.

CMS has scheduled a 2.8 percent increase in 2021 Medicare payments.

MedPAC said it is recommending the payment boost to reduce the disparity in payments at different care sites and is part of a larger effort to introduce site-neutral payments.

Congress is not required to implement the recommendation.

 

 

 

Hospital M&A spurs rising healthcare costs, MedPAC finds

https://www.healthcaredive.com/news/hospital-ma-spurs-rising-healthcare-costs-medpac-finds/566858/

Dive Brief:

  • Both vertical and horizontal hospital consolidation is correlated with higher healthcare costs, according to a congressional advisory committee on Medicare, in yet another study finding rampant mergers and acquisitions drive up prices for consumers.
  • The Medicare Payment Advisory Commission found providers with greater market share see higher commercial profit margins, leading to higher costs per discharge, though the direct relationship between market share and cost per discharge was not statistically meaningful itself.
  • MedPAC also found vertical integration between health systems and physician practices increases prices and spending for consumers. The top-down consolidation leads to higher prices for commercial payers and Medicare alike, as hospitals have more bargaining heft and benefit from Medicare’s payment hikes for hospital outpatient departments.

Dive Insight:

Hospital consolidation has become a major point of concern for policymakers, antitrust regulators and patient advocacy groups.slew of prior studies have found unchecked provider M&A contributes to higher healthcare costs, with the brunt often borne by consumers in the form of higher premiums and out-of-pocket costs.

Since 2003, the number of “super-concentrated” markets has increased from 47% to 57%, according to the MedPAC analysis of CMS and American Hospital Association data. Those markets, with a high amount of consolidation, rarely see new providers enter, which stifles competition, and are rarely reviewed by the government.

There’s been little change in antitrust regulation since the 1980s and, though the Federal Trade Commission has won several challenges to hospital consolidation in the 2010s, the agency only challenges 2% to 3% of mergers annually.

MedPAC also found super-concentrated insurance markets actually led to lower costs per discharge compared to lower levels of payer concentration, deflating somewhat hospital lobbies’ arguments that payer consolidation is driving prices higher.

Committee members called for more analysis of how macro trends like an aging population and federal policy could be driving consolidation and impacting prices, leading some to call for a revamp of the hospital payment framework itself.

“We have to change the way hospitals are paid. I don’t see another solution,” said Brian DeBusk, CEO of Tennesse-based DeRoyal Industries, a medical manufacturer. “Are you going to undo a thousand hospital mergers? Are you going to enact rate setting? I don’t see another way.”

MedPAC also looked at vertical integration, where hospitals snap up physicians practices downstream. According to the Physician Advocacy Institute, only 26% of physician practices were owned by hospitals in 2012, but by last year that number had spiked to 44%.

Since 2012, billing has shifted from physician offices to hospital outpatient departments, especially in specialty practices. In chemotherapy administration, for example, physician offices saw almost 17% less volume between 2012 and 2018, while outpatient centers saw a 53% increase in volume, according to MedPAC.

Physicians in hospital-owned practices also refer more patients to the hospital’s facilities and, despite a common stumping point that integration improves quality through care coordination, its effect on quality is “ambiguous,” MedPAC analyst Dan Zabinski said Thursday at the committee’s November meeting.

Despite the mountain of evidence, the AHA published a widely-decried study in September claiming acquired hospitals see a reduction in operating expenses and a statistically significant drop in readmission and mortality rates. The study was criticized for not using actual claims data in its analysis among other methodological and conflict of interest concerns.

Republican leaders in the House Energy and Commerce Committee asked MedPAC to study provider consolidation in August, and the body’s full findings will be included in its March report to Congress.​