MedPAC Votes on 2019 Payment Updates, Discusses Readmissions Penalty

January 22, 2018

At its January 11-12 public meeting, the Medicare Payment Advisory Commission (MedPAC) voted on its 2019 Medicare payment update draft recommendations to Congress and presented findings on an analysis of the Medicare Hospital Readmissions Reduction Program’s (HRRP) impact on utilization and mortality rates.

Payment and Other Policy Recommendations

MedPAC approved the following provider payment recommendations:

  • Hospital inpatient and outpatient services: 1.25% (current law)
  • Inpatient rehabilitation facilities: Reduce rates by 5%
  • Long-term care hospitals: No update
  • Skilled nursing facilities: No update
  • Home health: Reduce rates by 5% and rebase the payment system beginning in 2020
  • Ambulatory surgery centers: No update
  • Outpatient dialysis: 1.3% (current law)
  • Hospice: No update

MedPAC also recommended a unified post-acute care (PAC) prospective payment system (PPS) beginning in FY 2019 in the belief that the new system would increase access for medically complex beneficiaries and reduce disparities in Medicare margins across providers.

In addition, MedPAC continued to discuss an alternative to the mandatory physician quality program—the Merit-Based Incentive Payment System (MIPS)—recommending that Congress should replace it with a voluntary program focused on population-based measures.

Readmissions Report

MedPAC staff presented the findings of its study on the effects of the HRRP, including:

  • Medicare payments for hospital readmissions have declined by over $2 billion (2016 vs. 2010).
  • The savings from lower readmissions were partially offset by higher spending in emergency department and observation services for patients with a prior admission. The change in emergency department and observation services was similar for all conditions (those included in the HRRP, as well as others).
  • There appears to be little relationship between the changes in readmission rates and mortality rates from 2008 to 2016.

MedPAC will continue its review of the HRRP, including potential policy refinements, at future meetings. GNYHA will continue to closely monitor MedPAC’s discussions and advocate for corrections to address flaws in the current penalty formula.