MedPAC, MACPAC Release March Reports to Congres

March 22, 2021

The Medicare Payment Advisory Commission (MedPAC) released its March 2021 Report to Congress, which includes an assessment of payment adequacy across provider settings and recommendations for fiscal year (FY) 2022 payment updates. The Commission recommended that Congress update Medicare rates for acute care hospitals by 2% in FY 2022. To review MedPAC’s payment update recommendations across all settings, please see GNYHA’s summary of the Commission’s January meeting.

MedPAC also presented policy options for temporarily expanding telehealth coverage after the COVID-19 public health emergency (PHE) ends to gather evidence to inform any permanent changes. MedPAC suggested that Medicare should temporarily pay for specified telehealth services regardless of a beneficiary’s location, including certain audio-only services, if there is the potential for clinical benefit. MedPAC also stated that after the PHE ends, Medicare should return to paying the physician fee schedule’s “facility” rate for telehealth services provided by distant-site clinicians (during the PHE, Medicare pays the same rate it would have paid for an in-person service) and collect data on the cost of providing these services. MedPAC also suggested prohibiting providers from reducing or waiving cost sharing for telehealth services after the PHE ends and presented other potential safeguards against unnecessary spending and fraud.

The Medicaid and CHIP Payment and Access Commission (MACPAC) also released its March 2021 Report to Congress, which included its annual report on Medicaid disproportionate share hospital (DSH) allotments to states.

MACPAC recommended that Congress provide an automatic Medicaid countercyclical financing model based on the prototype developed by the US Government Accountability Office to address the challenge that states face during recessions when Medicaid enrollment grows and state revenues decline, which make it difficult for them to finance their share of Medicaid expenditures. MACPAC argued that this would ensure Federal funds flow quickly to Medicaid and would give states more certainty about their budgets.

As in prior years, MACPAC found no meaningful relationship between DSH allotments to states and the three potential indicators of need for DSH funds that Congress requires it to study: the number of uninsured individuals, the amount and sources of hospitals’ uncompensated care costs, and the number of hospitals with high levels of uncompensated care that also provide essential community services for low-income, uninsured, and vulnerable populations. MACPAC explained that the lack of a meaningful relationship is due to DSH allotments being largely based on states’ historical DSH spending before Federal limits were established in 1992.

MACPAC found that the number of uninsured individuals and the unpaid costs of care for these patients increased between 2018 and 2019 by 1.1 million and $2.8 billion, respectively. Additionally, the Medicaid shortfall decreased by $3.2 billion between 2017 and 2018. MACPAC noted that the COVID-19 PHE is substantially impacting hospital finances due to the increased costs of treating patients with COVID-19 and revenue losses from delays in elective procedures, with particularly severe impacts on safety net hospitals. MACPAC stated that whether the additional funding provided by Congress through the Provider Relief Fund has been sufficient to cover the financial losses of safety net providers is unclear and that it will continue to monitor the pandemic’s effects on hospital finances as more data become available.

MACPAC noted that in December, Congress further delayed DSH allotment reductions until FY 2024 and extended reductions through FY 2027, with allotments reduced by $8 billion each year. Allotment reductions will amount to 57.8% of states’ unreduced allotments nationally, with even greater reductions in some GNYHA member states (New York: 69.4%, New Jersey: 62.3%, Connecticut: 51.4%, and Rhode Island: 90%).