On December 10-11, 2015, the Medicare Payment Advisory Commission (MedPAC) held a public meeting to report on the status of a number of Medicare payment systems, and to develop draft recommendations for payment updates that MedPAC will vote on at its next meeting in January 2016.  Among the topics discussed were the status of the Medicare Advantage program, as well as payment adequacy and updates for (1) hospital inpatient and outpatient services; (2) physician, professional, and ambulatory surgical center services; (3) hospice services; (4) skilled nursing facility services; (5) outpatient dialysis services; (6) long-term care hospitals; (7) inpatient rehabilitation facility services; and (8) home health care services.  MedPAC is expected to release its meeting transcript containing its draft recommendations sometime this week.  

MedPAC released presentations on the following topics during the two-day meeting:

1. Medicare Advantage program status report.  The presentation indicates that inter-county benchmark inequities remain an issue and that MedPAC had asked CMS to work on the issue and consider relief for disadvantaged counties.  The presentation also notes that MedPAC was considering draft recommendations for benchmarks and coding intensity.
2. Assessing payment adequacy and updating payments for hospital inpatient and outpatient services.  The presentation indicates that preliminary data shows that Medicare fee-for-service hospital spending increased in 2014 and that overall Medicare margins have been relatively stable since 2009.  MedPAC also considered a proposal on the 340B Drug Pricing Program for redistributing part of the savings on 340B drugs, noting that 340B hospitals’ acquisition costs for Part B drugs were much lower than Medicare payment rates.
3. Assessing payment adequacy and updating payments for physicians, other health professionals, and ambulatory surgical centers.  The presentation indicates that payment adequacy for physician and other health professional services had not changed, and that access to ASC services is stable, access to capital is adequate, and that revenue per FFS beneficiary has generally increased (slide 24).  This suggests that no pay increase will be recommended for these services under MedPAC’s upcoming draft proposals.
4. Assessing payment adequacy and updating payments for hospice services.  The presentation indicated that hospice providers’ access to capital appears adequate, suggesting that no pay increase would be recommended in MedPAC’s draft recommendations.
5. Assessing payment adequacy and updating payments for skilled nursing facility services.  The presentation noted that the level of Medicare payments for skilled nursing facility services remains too high, and suggested several approaches including rebasing Medicare payments.
6. Assessing payment adequacy and updating payments for outpatient dialysis services.  The presentation raised the issue of a potential low-volume adjustment and expressed concerns with the accuracy of cost reports.
7. Assessing payment adequacy and updating payments for long-term care hospitals.  The presentation indicated that recent legislation provides near-term regulatory certainty and that a moratorium on new facilities and bed expansion from April 1, 2014 through September 30, 2017, reduces the opportunity for expansion and the need for capital.
8. Assessing payment adequacy and updating payments for inpatient rehabilitation facility services.  The presentation indicated that providers’ access to capital appears adequate, and that aggregate margin is high and projected to increase, suggesting that no pay increase would be recommended in MedPAC’s draft recommendations.
9. Assessing payment adequacy and updating payments for home health care services.  The presentation indicated that providers’ access to capital is adequate, suggesting that no pay increase would be recommended in MedPAC’s draft recommendations.

Reporter, John Whittaker, Sacramento, +1 916 321 4808, jwhittaker@kslaw.com.