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MedPAC finalizes 2015 hospital payment, LTCH reform recommendations

January 16, 2014

The Medicare Payment Advisory Commission today approved a final recommendation that Congress increase Medicare payment rates for the hospital inpatient and outpatient prospective payment systems by 3.25% in 2015, noting that its recommendation is 5.25% if the sequester continues in 2015. 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 the same rates as general acute-care hospitals for cases involving patients who are not deemed “chronically critically ill,” defined as an intensive care unit stay of at least eight days. 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 MedPAC recommended a substantial update for hospitals in 2015, recognizing that even efficient hospitals will have negative margins,” said Linda Fishman, AHA senior vice president for public policy analysis and development. “However, we are 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. In addition, the LTCH recommendation is at odds with the sweeping LTCH payment reforms recently enacted by Congress in the Bipartisan Budget Act, and we are troubled by the lack of analysis evaluating the consequences this recommendation would have on the LTCH field and the beneficiaries it serves.” For more information, see AHA’s recent letter to MedPAC.