The Medicare Payment Advisory Commission on Thursday expressed unanimous support for two linked draft recommendations meant to push Medicare hospital payments towards value-based care.
Under the first, acute care hospitals would receive a 2% increase to Medicare payment in fiscal year 2020, up from a 1.25% recommendation last year. CMS ended up finalizing a 1.85% update for 2019. The 2% increase would redirect an additional 0.8% to be used to increase payments in a consolidated hospital quality incentive program.
The latter is the subject of a second recommendation to consolidate four existing hospital quality incentive programs into one, called the Hospital Value Incentive Program (HVIP). Medicare's Hospital Readmissions Reduction Program, Hospital Value-based Purchasing Program and Hospital-Acquired Condition Reduction Program would be folded into HVIP, while the Inpatient Quality Reporting Program would be eliminated.
The two draft recommendations come amid a season of top-down Medicare experimentation. MedPAC, which provides advisory support to CMS and Congress on Medicare, has been focused on the shift to value-based care in recent days, and its new linked proposals are no exception.
The 2% updated 2019 base payment rates for 2020 would increase payments in a merged hospital value incentive program. The changes aren't expected to alter spending relative to current law, MedPAC said, but it would reward high quality providers — hopefully without limiting access to care.
MedPAC found in an analysis of 2017 data that beneficiaries maintained good access to care, providers maintained strong access to capital and quality improved, all despite negative Medicare margins. MedPAC says the new payment increases directed to HVIP balance the need for payments high enough to keep hospitals operating, the need to maintain fiscal pressure on hospitals for cost controls and the need to reward high quality providers.
The second draft recommendation introduces HVIP. The new quality incentive program would include a small set of population-based outcome, patient experience and value measures and will score hospitals based on performance targets.
HVIP would also account for differences in patients' social risk factors by distributing payment adjustments through peer grouping, something safety net hospitals will be happy about.
Such hospitals feel they've been penalized unfairly under programs such as the Hospital Readmission Rates Program (HRRP), as they treat a disproportionately high number of socioeconomically-disadvantaged patients who are more likely to be readmitted.
HVIP, if implemented, would increase inpatient spending because it eliminates current quality incentive programs, MedPAC reported Thursday. But HVIP would be less burdensome for providers and would give higher Medicare payments to hospitals providing higher quality care.
It's a "really elegant way for bringing disparate quality programs together," said Jonathan Perlin, MedPAC commissioner and HCA chief medical officer, at Thursday's meeting.
"I think it's a big improvement over what we have now," agreed commissioner Paul Ginsburg of the Brookings Institution.
Though existing reporting programs like the Hospital Value-Based Purchasing program are supported by CMS and bodies such as MedPAC, the industry hasn't been as happy about the changes — and is likely to be uncertain about the new HVIP as well.
On Tuesday, CMS released Hospital Value-Based Purchasing Programs results for 2019. Fewer hospitals are slated to receive incentive bonuses, but the data suggest small improvements in quality for participating hospitals.
HRRP incentivizes hospitals to drive down unnecessary readmissions by imposing financial penalties on hospitals with higher 30-day readmission rates than the national average.
A JAMA study in late September found no evidence that improvements in readmission rates were tied to increases in mortality rates among Medicare beneficiaries under HRRP, suggesting that it saves hospital and payer dollars with no corresponding decrease in care quality.
Although current models see some success, MedPAC is doubling down on its June recommendation that CMS consolidate VBP and the three other hospital payment incentive programs currently being used under Medicare that were created by the Affordable Care Act.
But providers have been vocal about their disapproval of reporting measures, citing the administrative burden they hoist on already stressed hospital systems and clinicians.
The two draft recommendations will be finalized and voted on at MedPAC's January meeting before being sent to Congress in a guidance report in March.