MedPAC wants to boost Medicare acute-care hospital payments 2.8%

ROBERT KING  March 15, 2019

Medicare payment advisors are expected to call on Congress to boost payments to hospitals by 2.8%, with some of the raise going to fund a revamped quality program.

The Medicare Payment Advisory Commission made the recommendation in its March report to Congress expected to be released on Friday, the executive director of the commission said. It is rare for MedPAC to call for a payment above current law, but the panel was concerned that high-quality hospitals were losing money under Medicare.

"When a hospital or provider is being efficient and still can't stay in the black in Medicare that is cause for concern," said MedPAC Executive Director Jim Matthews on a call with reporters Friday.

Matthews said there were 291 relatively efficient hospitals that had low costs but high quality. The Medicare margin for such hospitals was negative 2% in 2017. That was an increase from negative 1% in 2016.

MedPAC recommended giving all acute-care hospitals a 2% bump in payments. The 0.8% would fund a new quality program that consolidates four existing programs.

"Hospitals in the aggregate get all of the dollars that they would under current law but more dollars are distributed to those hospitals performing best on quality and cost metrics," Matthews said.

The consolidated program merges three existing quality programs: hospital readmissions, hospital-acquired conditions and value-based purchasing. MedPAC recommends eliminating the inpatient quality reporting program, calling it obsolete.

The new quality program, which MedPAC commissioners approved in January, would reward hospitals on the same performance targets that include mortality and patient experience.

MedPAC also reviewed whether Medicare's inpatient and outpatient payment systems are incentivizing the prescription of opioids over non-opioid alternatives. Ultimately, the commission found neither payment system discriminates against non-opioid medication, as there are cheaper and more expensive version of the drugs.

The CMS also monitors opioid use through tracking programs in Medicare Part D, but not in Part A or B.

"If Medicare were to undertake an opioid monitoring program in Part A and B, there are structural differences from Part D that would require adaptation of CMS's current Part D monitoring program," the report said.

MedPAC also recommended cutting the payment rate for inpatient rehabilitation facilities by 5% , hospice services by 2% and home health by 5% compared to 2019.

Medicare payments have been exceeding costs for those post-acute care facilities, according to the commission. For example, the projected 2019 Medicare margin for home health freestanding agencies is 16%.

"For more than a decade, payments under the home health prospective payment system have consistently and substantially exceeded costs," the report said.

MedPAC suggested bumping payments to long-term care hospitals by 2% since those payments have grown slowly. The commission projected a long-term hospital that has more than 85% of Medicare discharges will have an average Medicare margin of 1.2% in 2019.

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