MedPAC Updates its Work on Payment Policy Issues

October 22, 2018

The Medicare Payment Advisory Commission (MedPAC) met October 4-5 to discuss its work on various Medicare payment policy issues.

Hospital ED Payments

MedPAC found that the Medicare program spends $1-2 billion per year on “non-urgent” emergency department (ED) services that may be more appropriate for urgent care centers. MedPAC staff suggested that, rather than conduct retrospective audits, the Commission consider educating beneficiaries, expanding quality measurement for avoidable ED use, and/or encouraging hospital EDs to coordinate care with primary care providers.

MedPAC also detailed how the coding of ED visits has shifted to higher levels over time. ED visits are coded based on numerical levels (1 to 5) to reflect expected resource use. MedPAC attributed the shift to upcoding rather than an increase in patient acuity. The commissioners discussed options to address this, including creating national guidelines for coding ED visits or establishing a single code for all ED visits. Many commissioners expressed concern about consolidating to a single code for ED visits.


MedPAC discussed addressing the declining supply of primary care physicians per beneficiary by creating a Medicare scholarship or loan repayment program for medical students who commit to primary care for Medicare beneficiaries. In future meetings, MedPAC will discuss increasing the accountability of Medicare’s graduate medical education (GME) payments. In 2010, MedPAC recommended reducing indirect GME payments by $3.5 billion and redistributing the funds through a performance-based incentive program to promote accountability. GNYHA strongly opposed this recommendation.

In addition, MedPAC discussed eliminating “incident to” billing for Advance Practice Registered Nurses (APRNs) and Physician Assistants (PAs) (i.e., when APRNs/PAs bill under the physician’s National Provider Identifier (NPI) and receive 100% of the physician fee schedule rate versus 85% under their own NPI) and/or requiring APRNs and PAs to indicate a field of practice. These policies are intended to reduce Medicare expenditures, improve fee schedule valuations, and help Medicare identify primary care clinicians.

IPF Payment Issues

MedPAC staff presented their findings on Medicare payments to inpatient psychiatric facilities (IPFs). The analysis showed wide variation in IPF Medicare margins, ranging from -18.5% for hospital-based, not-for-profit facilities to +29.2% for freestanding, for-profit IPFs. Potential causes of this disparity include program integrity issues (e.g., MedPAC found that many IPFs, the vast majority of which are freestanding, for-profit facilities, do not comply with the requirement to report drug costs) and accuracy of the IPF prospective payment system (PPS), suggesting that payments under the IPF PPS may be too low for patients requiring high levels of staff time and too high for others. MedPAC also found that a significant portion of beneficiaries do not receive adequate post-discharge care and have high rates of potentially preventable 30-day readmissions. GNYHA will continue to urge the Centers for Medicare & Medicaid Services to refine the IPF PPS to improve payment accuracy.

Payment for Pain Management Treatment

MedPAC staff presented their plan to analyze Medicare payment for pain management treatments as required by the recently passed SUPPORT for Patients and Communities Act. MedPAC must report by March 2019 how Medicare pays for opioids and non-opioid alternatives in hospital settings, how payment may impact prescribing incentives, and how Medicare tracks opioid use. MedPAC will present its preliminary findings at its January 2019 meeting, and will provide a full analysis in its March report.

PAC PPS Design Update

MedPAC also detailed plans for evaluating an episode-based unified post-acute care (PAC) PPS and possible uniform measures for a PAC value-based purchasing (VBP) program. These measures include readmissions, Medicare spending per beneficiary, combined admissions and readmissions, discharge to community, patient experience, and infection rates. Next spring, MedPAC staff will present its PAC PPS design and will develop two uniform outcomes measures that, in the future, could be used to model a potential PAC VBP.