Medicare Payment Policy

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encourages more 60-day episodes. Furthermore, the design of Medicare’s payment systems for both SNF services and home health care encourages providers to furnish rehabilitation therapy to boost payments above costs. Current practice patterns reflect these financial incentives to provide more and certain types of service, regardless of their clinical value for the patient. Finally, the separate PAC silos of payment—each setting is paid under a separate payment system, each of which has its own set of financial incentives—do not include any incentives to coordinate care across multiple providers or encourage safe transitions to the patient’s home. Instead, providers have an incentive to focus on their narrow, near-term gains, which may not best serve the beneficiary. Broad reforms that would move Medicare beyond pAC silos Recognizing the shortcomings in Medicare payment systems, the Commission has worked on four broad reforms to encourage a more seamless, patient-centered approach to match services and settings to the needs of each patient. Under these reforms, payments would reflect the characteristics of the patient, not the services furnished or the setting, and would encourage the use of the lowest cost mix of services necessary to achieve the best outcomes. These reforms include bundled payments and accountable care organizations (ACOs); a common patient assessment instrument; the development of risk-adjusted, outcomes-based quality measures; and the alignment of readmission policies across settings. Bundled payments and ACos Bundled payments and ACOs would pay an entity for an array of services over a defined period. Under bundled payments, one payment bundle would cover all PAC services following a hospitalization. Under an ACO, participating health care providers assume some financial risk for the cost and quality of care delivered to a defined population and share in savings if they can limit costs while maintaining quality. Under both reforms, providers have an incentive to get patients the right services at the right time, coordinate care, and use resources efficiently. The Commission recommended testing bundled payments for PAC services in 2008 and continues to work on these PAC bundle reforms. In 2011, the CMS Innovation Center launched a bundling initiative with two models that include PAC (one model includes the hospital stay and PAC; the other includes only PAC during a period after discharge from the hospital). In June 2012, entities interested in participating in the initiative submitted proposals that described the conditions that would be included, the length of the bundle (30, 60, or 90 days after discharge from the hospital), and the target price. After reviewing the applications, CMS announced a preliminary list of 48 conditions candidates can select to test. There are 69 participants in models that include PAC, involving 357 health care organizations. Pending contract finalization and program integrity audits, awardees are expected to be at risk midyear 2013. The Commission commented on the proposed rules for ACOs and continues to monitor their progress. Shared savings programs for ACOs represent an opportunity to reward providers who control their costs, improve quality of care, better coordinate care, and become more engaged in their care management. Given the wide variation in Medicare spending, both bundled payments and ACOs could yield considerable savings over time by replacing inefficient and unneeded care with a more effective mix of services. A common assessment instrument The second broad reform would require all PAC providers to use the same patient assessment tool. In 2005, the Commission called for such a tool so that patients, their service use, and outcomes could be compared across settings. CMS completed a mandated demonstration of a common assessment tool in 2011. It found that such a tool was feasible, and its analysis of resource use indicated the potential for a single-payment system across institutional settings. new quality measures The Commission has begun to develop risk-adjusted, outcomes-based measures for some PAC settings so that the efficacy of settings and services can be assessed. Because much PAC aims to get the patient home, we have developed measures for risk-adjusted rates of discharge to the community for SNFs and IRFs. Rehospitalization rates, especially for conditions that are potentially avoidable, are a good gauge of the care furnished by the facility, and we now use this measure in evaluating the quality of SNFs, IRFs, and HHAs. We have developed measures for these same three settings that extend rehospitalization measures to include a period after discharge. This inclusion holds providers accountable for safe care transitions. Aligning measures across sites allows comparisons of providers’ quality and could eventually be used to tie payments to outcomes. 152 Post-acute care providers: Shortcomings in Medicare’s fee-for-service highlight the need for broad reforms
expanded readmission policies The Commission has examined expanding readmission policies to PAC settings so that hospital and PAC incentives are aligned and focused on unnecessary rehospitalizations. Such policies would hold PAC providers and hospitals jointly responsible for the care they furnish in their own settings and for safe transitions to the next one. Such policies discourage providers from discharging patients prematurely or without adequate patient and family education. Aligning policies would emphasize the need for providers to manage care during transitions between settings, coordinate care, and partner with providers to improve quality. We have recommended readmission policies for hospitals (now in place) and SNFs, and we are working on similar policies for home health care and IRFs. ■ Report to the Congress: Medicare Payment Policy | March 2013 153
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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
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tABLe 4-4 type of service Change in
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tABLe 4-5 type of imaging Change in
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the patient-centered medical home T
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FIguRe FIGURE Cumulative percent ch
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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
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Page 168 and 169: anticipated under the modernized pa
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 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
Page 218 and 219: FIGURE FIguRe Number of new agencie
Page 220 and 221: tABLe 9-2 of services. The review a
Page 222 and 223: tABLe 9-4 Community-admitted home h
Page 224 and 225: tABLe 9-5 type of county Claims dat
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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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