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MedPAC issues 2015 payment, LTCH recommendations

January 24, 2014

The Medicare Payment Advisory Commission (MedPAC) last week approved a final recommendation that Congress increase Medicare payment rates for the hospital inpatient and outpatient prospective payment systems (PPS) by 3.25% in 2015, noting that its recommendation is 5.25% if the sequester continues in 2015. MedPAC is Congress’ top adviser on Medicare payment policies.

The commission also recommended that, concurrently, Congress reduce or eliminate payment differences between hospital outpatient departments and physician offices for selected procedures and pay long-term care hospitals (LTCH) the same rates as general acute-care hospitals for cases involving patients who are not deemed “chronically critically ill,” (CCI) defined as an intensive care unit stay of at least eight days.

MedPAC staff estimate that the policy would reduce overall LTCH payments by 36%. Savings realized by cutting LTCH payments would be redistributed to create a new outlier pool for CCI cases treated in inpatient PPS hospitals. In a change from the draft recommendation, the LTCH policy would be phased in over three years.

“We are pleased that Med-PAC recommended a substantial update for hospitals in 2015, recognizing that even efficient hospitals will have negative margins,” said Linda Fishman, the AHA’s senior vice president for public policy analysis and development.

Fishman said the AHA is “troubled by the recommendation to reduce or eliminate payment differences between hospital outpatient departments and physician offices for 66 ambulatory payment classifications, which could threaten access to care for Medicare beneficiaries.”

She also said the commission’s LTCH recommendation is at odds with the sweeping LTCH payment reforms recently enacted by Congress in the “Bipartisan Budget Act.” She added the AHA is “troubled by the lack of analysis evaluating the consequences this recommendation would have on the LTCH field and the beneficiaries it serves.”

In other action, MedPAC adopted a final recommendation to freeze payments for long-term care hospitals, inpatient rehabilitation facilities (IRF), ambulatory surgical centers, home health (HH), hospice and dialysis providers under Medicare prospective payment systems for 2015.

In addition, the commission recommended creating a readmissions reduction policy that would apply a penalty to HH payments for HH readmissions to hospitals that exceed a riskadjusted target, and it proposed creating a common post-acute assessment instrument for HH, skilled nursing facilities (SNF), IRFs and LTCHs in 2016.

The commission also extended through 2015 its prior recommendation to freeze payments for SNFs and rebase the SNF PPS.