Medicare Payment Policy

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anticipated under the modernized payment bundle. The 2013 Medicare margin includes the following policy changes: (1) the increase in the payment rate via the statutory update for 2012 and 2013 (of 2.1 percent and 2.3 percent, respectively), (2) the estimated decrease in total payments due to the quality incentive program in 2012 and 2013 (0.2 percent and 0.3 percent, respectively), and (3) the increase in payments due to the 2013 transitional budget-neutrality factor that CMS finalized for the 2013 payment year (of 0.1 percent). How should Medicare payments change in 2014? Two major provisions under current law affect the 2014 outpatient dialysis payment rate. First, the American Taxpayer Relief Act of 2012 rebases the outpatient dialysis payment rate effective 2014 to reflect more current utilization of dialysis drugs and other services. The law mandates that the Secretary (1) rebase the outpatient dialysis payment rate effective 2014 based on changes between 2007 and 2012 in the utilization of ESAs, other drugs and biologicals, and diagnostic laboratory tests; and (2) delay the inclusion of oral-only ESRD-related drugs into the payment bundle until 2016. Second, MIPPA and the Patient Protection and Affordable Care Act of 2010 mandated, beginning in 2012, that the Secretary annually update the outpatient dialysis payment rate by an ESRD market basket index reduced by a productivity adjustment. CMS measures price inflation for ESRD goods and services associated with the modernized prospective payment bundle. CMS’s latest forecast of this index for calendar year 2014 is 2.8 percent. Under current law, the ESRD update is subject to a productivity adjustment, currently estimated at 0.4 percent. update recommendation Our payment adequacy indicators suggest that payments are adequate. It is also relevant to note that over 90 percent of the industry opted to be paid fully under the new payment system rather than go through a transition. It also appears that facilities have become more efficient under the new payment method as measured by declining use of injectable dialysis drugs between 2010 and 2011. ReCoMMenDAtIon 6 the Congress should not increase the outpatient dialysis bundled payment rate for calendar year 2014. 142 Outpatient dialysis services: Assessing payment adequacy and updating payments RAtIonALe 6 Most of our indicators of payment adequacy are positive, including beneficiaries’ access to care, the supply and capacity of providers, volume of services, quality of care, and access to capital. Providers have realized efficiencies under the modernized payment method as evidenced by declining use of injectable dialysis drugs. The Medicare margin is estimated at 2 percent to 3 percent in 2011 and projected at 3 percent to 4 percent in 2013. Current law mandates that rebasing begin in 2014. On the one hand, prompt rebasing of the dialysis PPS may prevent overpayment of these providers, and the fact that nearly all dialysis facilities elected to be paid under the modernized payment method suggests that the base payment rates under the modernized payment method are more generous than the previous system. On the other hand, it may be too early to determine how much rebasing is needed without 2011 dialysis facility cost reports, which would help to provide a more complete picture of facilities’ response to the modernized payment method. We will reevaluate the adequacy of Medicare’s payments for outpatient dialysis services and the need for and level of rebasing when we have more information. IMpLICAtIons 6 spending • Under current law, the payment rate would be (1) rebased in 2014 to reflect changes between 2007 and 2012 in the use of dialysis drugs and diagnostic laboratory tests and (2) updated by the ESRD market basket less a productivity adjustment, which is currently estimated at 2.4 percent. This recommendation, which holds the 2014 payment rate at the 2013 level, would increase federal program spending relative to the statutory update law by between $50 million and $250 million for one year and by less than $1 billion over five years. Beneficiary and provider • We do not anticipate any negative effects on beneficiary access to care. This recommendation is not expected to affect providers’ willingness or ability to serve beneficiaries. Future research agenda To address the high and unchanging rates of inpatient admission, the Commission intends to explore the effectiveness of payment approaches that have the potential to improve dialysis quality by decreasing the
high inpatient admission rate. Such approaches include expanding the dialysis payment bundle to include outpatient services that have the potential to affect the high rate of inpatient morbidity, such as vascular access services (Medicare Payment Advisory Commission 2008). We also intend to consider an even larger payment bundle that could, for example, include all services needed to treat dialysis beneficiaries during the course of a month. One example of such a larger payment bundle is the ESRD special needs plans—a subcategory of coordinated care plans in MA. In this report, we recommend that the Congress continue chronic special needs plans only for a small number of conditions, including ESRD (see Chapter 14). ESRD ACOs represent another payment approach of a larger payment bundle that ESRD industry representatives have proposed as a means to improve dialysis quality and control costs (Nissenson et al. 2012). ■ Report to the Congress: Medicare Payment Policy | March 2013 143
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RepoRt to the CongRess Medicare Pay
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RepoRt to tHe CongRess Medicare Pay
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with the structure of the payment s
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table of contents Acknowledgments .
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executive summary
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of services—and pressure on feder
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current Medicare payments are adequ
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outpatient dialysis services Outpat
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some facilities are willing to acce
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coverage for conventional treatment
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of care for these conditions should
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Context for Medicare payment policy
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4 Context for Medicare payment poli
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FIguRe FIGURE 1-2 1-2 12% Out of po
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the level of health care spending a
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1-4 FIguRe 1-4 140 120 100 80 60 Do
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FIguRe 1-6 1-6 Growth rate (in perc
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FIGURE FIguRe Share of GDP (in perc
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Share of GDP (in percent) FIGURE 1-
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FIGURE FIguRe 1-10 1-10 8% African
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FIguRe 1-12 1-11 1800 1600 1400 120
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Americans than for other racial and
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References Agency for Healthcare Re
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Medicare Payment Advisory Commissio
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Assessing payment adequacy and upda
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The goal of Medicare payment policy
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may go up when payment rates go dow
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hospitals and that hospitals shift
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individual payment systems but also
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Hospital inpatient and outpatient s
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Hospital inpatient and outpatient s
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covered the fully allocated costs o
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3-1 3-1 FIguRe 100 80 60 40 Number
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Visits or claims per 1,000 benefici
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3-4 3-4 FIguRe 2012 dollars (in bil
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of physicians employed directly by
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FIguRe FIGURE Annual percent change
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FIGURE FIguRe Margin (in percent) 3
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FIGURE FIguRe Margin (in percent) 3
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tABLe 3-5 performance of efficient
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Act, the EHR Incentive Program also
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as Medicaid expands, the new insura
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ates for separately paid drugs resu
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endnotes 1 From 2002 to 2011, 479 h
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References Agency for Healthcare Re
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C H A p t e R4 physician and other
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physician and other health professi
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from the SGR system in its October
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4-1 4-1 FIguRe 40 35 30 25 20 15 10
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tABLe 4-1 Most aged Medicare benefi
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tABLe 4-2 Medicare beneficiaries ha
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payment adjustments for health prof
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tABLe 4-3 Year physicians primary c
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provider’s characteristics, geogr
Page 118 and 119: tABLe 4-4 type of service Change in
Page 120 and 121: tABLe 4-5 type of imaging Change in
Page 122 and 123: the patient-centered medical home T
Page 124 and 125: FIguRe FIGURE Cumulative percent ch
Page 126 and 127: References ABIM Foundation. 2012. C
Page 129 and 130: Ambulatory surgical center services
Page 131 and 132: Ambulatory surgical center services
Page 133 and 134: Background An ambulatory surgical c
Page 135 and 136: Differences in types of patients tr
Page 137 and 138: Differences in types of patients tr
Page 139 and 140: number of services grew from 2006 t
Page 141 and 142: tABLe 5-7 rapidly than nonowning ph
Page 143 and 144: Creating a value-based purchasing p
Page 145 and 146: Revisiting the ambulatory surgical
Page 147 and 148: endnotes 1 Because CMS updates paym
Page 149: Medicare Payment Advisory Commissio
Page 152 and 153: R e C o M M e n D A t I o n 6 The C
Page 154 and 155: 128 Outpatient dialysis services: A
Page 156 and 157: tABLe 6-1 Characteristics of FFs di
Page 158 and 159: Physicians Association has publishe
Page 160 and 161: tABLe 6-3 Increasing number and cap
Page 162 and 163: Number of FFS dialysis beneficiarie
Page 164 and 165: FIguRe 6-3 Percent of dialysis bene
Page 166 and 167: and 2011, the proportion of adult h
Page 170 and 171: endnotes 1 In this chapter, we use
Page 172 and 173: References ABIM Foundation. 2012. C
Page 175: C H A p t e R7 post-acute care prov
Page 178 and 179: encourages more 60-day episodes. Fu
Page 181 and 182: C H A p t e R8 skilled nursing faci
Page 183 and 184: skilled nursing facility services C
Page 185: adjust for differences in patients
Page 188 and 189: Description of beneficiaries who us
Page 190 and 191: snF prospective payment system and
Page 192 and 193: Number of SNFs FIguRe FIGURE 8-1 7-
Page 194 and 195: FIGURE FIguRe Percent 7-2 8-2 30 25
Page 196 and 197: and other SNF users were essentiall
Page 198 and 199: FIguRe FIGURE Program spending (in
Page 200 and 201: 7-8 8-6 FIguRe 30 25 20 15 10 Medic
Page 202 and 203: (e.g., whether there is a requireme
Page 204 and 205: the Commission’s 2012 update reco
Page 206 and 207: tABLe 8-9 non-Medicare margins were
Page 208 and 209: found to be associated with one or
Page 210 and 211: Smith, V. K., K. Gifford, E. Ellis,
Page 212 and 213: R e C o M M e n D A t I o n s (The
Page 214 and 215: 188 Home health care services: Asse
Page 216 and 217: tABLe 9-1 use and growth of home he
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FIGURE FIguRe Number of new agencie
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tABLe 9-2 of services. The review a
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tABLe 9-4 Community-admitted home h
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tABLe 9-5 type of county Claims dat
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tABLe 9-6 state County are collecte
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tABLe 9-8 Medicare margins for free
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tABLe 9-11 provider characteristics
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tABLe 9-12 Medicare visits per full
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strengthening incentives for effect
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endnotes 1 The exceptions pertain t
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C H A p t e R10 Inpatient rehabilit
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Inpatient rehabilitation facility s
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FIguRe FIGURE 10-1 9-1 Note: IRF (i
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Medicare IRF classification require
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tABLe 10-2 type of IRF 2004 2005 20
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tABLe 10-4 number of IRF beds decre
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weight for compliant cases was 1.39
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unobserved factors regarding patien
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freestanding IRFs were about $4,340
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increase for changes in the outlier
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References Centers for Medicare & M
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R e C o M M e n D A t I o n 11 The
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Quality of care—LTCHs only recent
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FIguRe FIGURE 11-1 10-1 Source: Med
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short-stay outlier cases in long-te
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tABLe 11-1 growth in the number of
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Chronically critically ill benefici
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Quality measures for long-term care
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tABLe 11-4 type of LtCH per case pa
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temporary legislative relief from s
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16 We observed growth over time in
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Durairaj, L., J. C. Torner, E. A. C
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Hospice services C H A p t e R12
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Hospice services Chapter summary Th
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Background Medicare began offering
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March 2009 Commission recommendatio
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March 2009 Commission recommendatio
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number peaking in 2009). With rapid
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tABLe 12-4 Hospice use has increase
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tABLe 12-5 Characteristic insurers
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three settings, respectively) (Tabl
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measures, it is likely that the vas
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tABLe 12-10 Category percentage poi
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• additional wage index changes,
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elieve the cost report data provide
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C H A p t e R13 the Medicare Advant
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288 The Medicare Advantage program:
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The Medicare Advantage (MA) program
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enchmark. If a plan’s bid is abov
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tABLe 13-3 projected payments excee
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We broke the fourth quartile into t
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tABLe 13-5 Distribution of enrollme
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tABLe 13-6 examples of measures inc
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tABLe 13-7 Between 2011 and 2012, l
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tABLe 13-9 admission-weighted ratio
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ecommended that payments be brought
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eport HEDIS measures based on admin
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C H A p t e R14 Medicare Advantage
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Medicare Advantage special needs pl
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integrating Medicaid benefits. We f
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tABLe 14-1 Distribution of snp enro
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previous Commission recommendations
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tABLe 14-4 Readmission rates by typ
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There has been recent movement in t
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of the quality measures that only S
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Separate appeals and grievances pro
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References Government Accountabilit
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status report on part D Chapter sum
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controlling growth in drug spending
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tABLe 15-2 and pharmacists who part
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Characteristics of Medicare benefic
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tABLe 15-6 Distribution of enrollme
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FIGURE FIguRe Percent of all Part D
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3). Most regions continue to have m
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tABLe 15-9 • Reinsurance—Medica
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tABLe 15-11 toward the OOP threshol
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tABLe 15-12 Cost-sharing amounts fo
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tABLe 15-14 enrollees—by about $9
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Drug price index equal to 1.0 at th
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Voluntary switchers Each year, Part
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endnotes 1 PPACA eliminates the cov
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References Boards of Trustees, Fede
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Commissioners’ voting on recommen
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Chapter 12: Hospice services The Co
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A p p e n D I X Moving forward from
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well as the cost of temporary repri
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payments rates be frozen at their c
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than primary care physicians (class
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achieving a total estimated 10-year
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would be costly, too, and they are
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payment accuracy. For example, such
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Final regulations on the ACO progra
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statemen nt of MedPAC’s position
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Cumulative percent change 70 7 60 6
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390 Moving forward from the sustain
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Note: The availability and scoring
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Acronyms AAgR average annual growth
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op outpatient opD hospital outpatie
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Commission members glenn M. Hackbar
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a state society of the National Med
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on the Advocate Physician Partners
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425 eye street, nW • suite 701
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Medicare Payment Policy

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