Brief

MedPAC suggests MIPS overhaul, more site-neutral payments

Dive Brief:

  • In its June report on Medicare and the healthcare delivery system, the Medicare Payment Advisory Commission (MedPAC) suggests a redesign of the Merit-based Incentive Payment System (MIPS), strengthening advanced alternative payment models and a prospective payment system for post-acute care (PAC) settings.
  • The commission said growing consolidation among hospitals and between physicians has increased prices without improving care quality. The report recommends restraining Medicare prices in response to horizontal consolidation and imposing site-neutral pricing in response to vertical consolidation.
  • The report also notes the rapid growth of stand-alone emergency departments and pushes policymakers to consider reducing payment rates for off-campus EDs and eliminating policy exemptions to site-neutral payment for ambulatory services.

Dive Insight:

Although physician payments won’t be tied to performance metrics through the MACRA program until 2019, providers are preparing now to comply. Major changes would be hard to implement, but the MedPAC report suggests MIPS should be based on population health measures instead of metrics that the providers choose from a lengthy list.

The commission also suggests moving up the timetable for changing to a PAC prospective payment system that bases payments on patient characteristics instead of the site of service. The report recommends implementation in 2021 with a three-year transition, but the American Hospital Association (AHA) has balked at that idea. In a statement, the group said “it remains unclear how policymakers could eliminate four to five years” from the timeline “and still produce an accurate and reliable payment system.”

MedPAC’s observation on the effect of increased M&A activity in the healthcare sector is backed up by recent reports. PricewaterhouseCoopers found M&A was up 0.9% for the first quarter of this year while value was down 49.3%. The consolidation trend, however, shows no signs of slowing anytime soon.

The payment rates of stand-alone EDs have also been a hot topic lately. A disputed study published in the Annals of Emergency Medicine found free-standing ER patients paid as much as 10 times more than urgent care patients with similar diagnoses. However, a group of emergency physicians said the study methodology was flawed and drew unsupported conclusions.

Regardless, the growth of alternative care settings will likely continue, and pricing differences will be a point of contention. The CMS has worked to level the playing field with proposals for site-neutral payment systems in the Hospital Outpatient Prospective and Ambulatory Surgical Center payment systems. The AHA has also opposed this movement, calling it short-sighted and inflexible.

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Filed Under: Payer Finance Hospital Administration Policy & Regulation
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