Medicare Payment Policy

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The Hono orable Max Baucus Chairman n, Committee on Finance U.S. Sena ate 219 Dirks sen Senate Of ffice Building g Washington, DC 20510 0 The Hono orable Dave Camp C Chairman n, Committee on Ways and d Means U.S. Hous se of Represe entatives 1102 Lon ngworth House Office Building Washington, DC 20515 5 The Hono orable Fred Upton U Chairman n, Committee on Energy an nd Commerce e U.S. Hous se of Represe entatives 2125 Ray yburn House Office O Buildin ng Washington, DC 20515 5 RE: Mov ving forwar rd from the sustainable e growth ratte (SGR) syystem Dear Cha airmen and Ranking R Mem mbers: The susta ainable grow wth rate (SGR R) system— —Medicare’s formulaic payment methhod for servvices provided d by physicia ans and other r health prof fessionals—iis fundamenntally flawedd and is creatting instability y in the Med dicare progra am for provi iders and benneficiaries. TThis system, , which ties aannual updates to t cumulativ ve expenditur res since 199 96, has failedd to restrain volume groowth and, in fact, may have e exacerbate ed it. Althoug gh the pressu ure of the SGGR likely minimized feee increases inn the last decade, this t effect disproportiona ately burden ned physicianns and healthh professionals in speciaalties with less ability to in ncrease volum me. Addition nally, tempoorary, stop-gaap “fixes” too override thhe SGR are under rmining the credibility of o Medicare because b theyy engender uuncertainty aand anger ammong physician ns and other health profe essionals, wh hich may be causing anxxiety among beneficiariees. The risks of retaining r the SGR now clearly c outwe eigh the beneefits. Moreoover, the costt of full repeeal, as 1 . 601 New Jerseyy Avenue, N.W. • Suite 9000 Washington, DCC 20001 202-220-3700 • Fax: 202-220-37759 www.medpac.goov Glenn M. Hackbbarth, J.D., Chairmman Robert A. Berensson, M.D., F.A.C.PP., Vice Chairman n Mark E. Miller, PPh.D., Executive DDirector October 14, 2011 The Hoonorable Orriin G. Hatch Rankinng Member, CCommittee onn Finance U.S. Senate 104 Haart Senate Offfice Buildingg Washinngton, DC 200510 The Hoonorable Sannder M. Levinn Rankinng Member, CCommittee onn Ways and MMeans U.S. HHouse of Reprresentatives 1139EE Longworth HHouse Office Building Washinngton, DC 200515 The Hoonorable Hennry A. Waxman Rankinng Member, CCommittee onn Energy and Commmerce U.S. HHouse of Reprresentatives 2322AA Rayburn Hoouse Office Building Washinngton, DC 200515 Report to the Congress: Medicare Payment Policy | March 2013 371
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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
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Ambulatory surgical center services
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Ambulatory surgical center services
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Background An ambulatory surgical c
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Differences in types of patients tr
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Differences in types of patients tr
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number of services grew from 2006 t
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tABLe 5-7 rapidly than nonowning ph
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Creating a value-based purchasing p
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Revisiting the ambulatory surgical
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endnotes 1 Because CMS updates paym
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Medicare Payment Advisory Commissio
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R e C o M M e n D A t I o n 6 The C
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128 Outpatient dialysis services: A
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tABLe 6-1 Characteristics of FFs di
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Physicians Association has publishe
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tABLe 6-3 Increasing number and cap
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Number of FFS dialysis beneficiarie
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FIguRe 6-3 Percent of dialysis bene
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and 2011, the proportion of adult h
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anticipated under the modernized pa
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endnotes 1 In this chapter, we use
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References ABIM Foundation. 2012. C
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C H A p t e R7 post-acute care prov
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encourages more 60-day episodes. Fu
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C H A p t e R8 skilled nursing faci
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skilled nursing facility services C
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adjust for differences in patients
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Description of beneficiaries who us
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snF prospective payment system and
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Number of SNFs FIguRe FIGURE 8-1 7-
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FIGURE FIguRe Percent 7-2 8-2 30 25
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and other SNF users were essentiall
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FIguRe FIGURE Program spending (in
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7-8 8-6 FIguRe 30 25 20 15 10 Medic
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(e.g., whether there is a requireme
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the Commission’s 2012 update reco
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tABLe 8-9 non-Medicare margins were
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found to be associated with one or
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Smith, V. K., K. Gifford, E. Ellis,
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R e C o M M e n D A t I o n s (The
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188 Home health care services: Asse
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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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Page 352 and 353: of the quality measures that only S
Page 354 and 355: Separate appeals and grievances pro
Page 356 and 357: References Government Accountabilit
Page 359 and 360: status report on part D Chapter sum
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Page 364 and 365: tABLe 15-2 and pharmacists who part
Page 366 and 367: Characteristics of Medicare benefic
Page 368 and 369: tABLe 15-6 Distribution of enrollme
Page 370 and 371: FIGURE FIguRe Percent of all Part D
Page 372 and 373: 3). Most regions continue to have m
Page 374 and 375: tABLe 15-9 • Reinsurance—Medica
Page 376 and 377: tABLe 15-11 toward the OOP threshol
Page 378 and 379: tABLe 15-12 Cost-sharing amounts fo
Page 380 and 381: tABLe 15-14 enrollees—by about $9
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Page 384 and 385: Voluntary switchers Each year, Part
Page 386 and 387: endnotes 1 PPACA eliminates the cov
Page 388 and 389: References Boards of Trustees, Fede
Page 391 and 392: Commissioners’ voting on recommen
Page 393 and 394: Chapter 12: Hospice services The Co
Page 395: A p p e n D I X Moving forward from
Page 399 and 400: ecommend that the Congress offset t
Page 401 and 402: problematic than access to speciali
Page 403 and 404: patients in hospitals, nursing faci
Page 405 and 406: Collecting data to improve payment
Page 407 and 408: a percentage of fee-schedule spendi
Page 409 and 410: Within the ACO program, incentives
Page 411 and 412: ates. Primary care physicians and o
Page 413 and 414: Appendix 17 Report to the Congress:
Page 415 and 416: 19 Report to the Congress: Medicare
Page 417 and 418: • Along A with th he recommend da
Page 419: Acronyms
Page 422 and 423: gDR generic dispensing rate gI gast
Page 425: More about MedpAC
Page 429 and 430: Commissioners’ biographies scott
Page 431 and 432: Herb B. Kuhn is current president a
Page 433: Commission staff Mark e. Miller, ph
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Medicare Payment Policy

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