RepoRt - Medicare Payment Advisory Commission

303 Pages·2013·3.68 MB·English

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425 eye street, nW • suite 701 • Washington, DC 20001 1
[phone] • Fax: [phone] • www.medpac.gov 3
The Medicare Payment Advisory Commission (MedPAC) is an independent congressional
agency established by the Balanced Budget Act of 1997 (P.L. 105–33) to advise the U.S.
Congress on issues affecting the Medicare program. In addition to advising the Congress on
payments to health plans participating in the Medicare Advantage program and providers in
Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access
to care, quality of care, and other issues affecting Medicare.
The Commission’s 17 members bring diverse expertise in the financing and delivery of health
care services. Commissioners are appointed to three-year terms (subject to renewal) by the
Comptroller General and serve part time. Appointments are staggered; the terms of five or six
Commissioners expire each year. The Commission is supported by an executive director and
a staff of analysts, who typically have backgrounds in economics, health policy, and public
health.
MedPAC meets publicly to discuss policy issues and formulate its recommendations to
the Congress. In the course of these meetings, Commissioners consider the results of staff
research, presentations by policy experts, and comments from interested parties. (Meeting
transcripts are available at www.medpac.gov.) Commission members and staff also seek input
on Medicare issues through frequent meetings with individuals interested in the program,
including staff from congressional committees and the Centers for Medicare & Medicaid
Services (CMS), health care researchers, health care providers, and beneficiary advocates.
Two reports—issued in March and June each year—are the primary outlets for Commission
recommendations. In addition to annual reports and occasional reports on subjects requested
by the Congress, MedPAC advises the Congress through other avenues, including comments
on reports and proposed regulations issued by the Secretary of the Department of Health and
Human Services, testimony, and briefings for congressional staff.
J u n e 2 0 1 3
RepoRt to the CongRess
Medicare and the
Health Care
Delivery System
425 Eye Street, NW • Suite 701 • Washington, DC 20001
[phone] • Fax: [phone] • www.medpac.gov

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June 14, 2013
The Honorable Joseph R. Biden
President of the Senate
U.S. Capitol
Washington, DC 20510
The Honorable John A. Boehner
Speaker of the House
U.S. House of Representatives
U.S. Capitol
Room H-232
Washington, DC 20515
Dear Mr. President and Mr. Speaker:
I am pleased to submit the Medicare Payment Advisory Commission’s June 2013 Report to the Congress:
Medicare and the Health Care Delivery System. This report fulfills the Commission’s legislative mandate to
evaluate Medicare payment issues and to make recommendations to the Congress.
The report contains nine chapters. In the first six chapters, we consider issues addressing both broad questions
confronting the program, such as how to incorporate private plan and fee-for-service Medicare in one system,
and more sector-specific issues, such as the new hospital readmissions policy. The chapters include:
• a chapter describing a new payment model we refer to as competitively determined plan contributions.
• a chapter addressing Medicare payment differences across ambulatory settings.
• a chapter examining creating bundled payments for hospitalization episodes that include post-acute care
and other services.
• a chapter examining options for refining Medicare’s new hospital readmissions reduction program.
• a chapter analyzing hospice payment policy issues.
• a chapter discussing the care needs for dual-eligible beneficiaries.
We also include three chapters on reports mandated by the Congress in the Middle Class Tax Relief and Job
Creation Act of 2012. The Commission voted on the recommendations in these reports in November 2012 to
best advise the Congress on provisions that were scheduled to expire at the end of calendar year 2012. The
chapters include:
• a chapter on Medicare ambulance add-on payments and other aspects of the payment system.
• a chapter on geographic adjustment of payments for the work of physicians and other health professionals
under the physician fee schedule.
Page 2
• a chapter on Medicare payment for outpatient therapy services.
In an appendix, as required by law, we review CMS’s preliminary estimate of the update to payments under the
physician fee schedule for 2014.
I hope you find this report useful as the Congress continues to grapple with the difficult task of controlling the
growth of Medicare spending while preserving beneficiaries’ access to high-quality care and providing sufficient
payment for efficient providers.
Sincerely,
Glenn M. Hackbarth, J.D.
Enclosure
Acknowledgments
This report was prepared with the assistance of many Gillis, April Grady, Ronald Gresch, Peter Gruhn, Peter
people. Their support was key as the Commission Hussey, Ashish Jha, Jonathan Keyserling, Joanna Kim,
considered policy issues and worked toward consensus on Harlan Krumholtz, Gayle Lee, Kathy Lester, Susan
its recommendations. Levine, Keith Lind, Marian Lowe, Sean MaCurdy, Paul
Masi, Sharon McIlrath, Christina Metzler, Lyle Nelson,
Despite a heavy workload, staff members of the Centers
Tricia Newman, Pam Parker, Robert Reischauer, Hugh
for Medicare & Medicaid Services and the Department
Roghmann, Lisa Satterfield, Kathleen Sheehan, Sherry
of Health and Human Services were particularly helpful
Smith, Steve Speil, Caroline Steinberg, Jim Vertrees, Guan
during preparation of the report. We thank Melanie Bella,
Wang, Howard Weiss, Mary Wheatley, Daniel Ji-Heon
Susan Bogasky, Sophia Chan, Patrick Conway, Amanda
Yang, and Stephen Zuckerman.
Copsey, Kate Goodrich, Nancy Harrison, Zinnia Harrison,
Marc Hartstein, Katherine Lucas, Pamela Pelizzari, Once again, the programmers at Social and Scientific
Elizabeth Richter, Anne Tayloe-Hauswald, Randy Systems provided highly capable assistance to
Throndset, Traci Vitek, Pam West, and Stuart Wright. Commission staff. In particular, we appreciate the hard
work of Valerie Aschenbach, Daksha Damera, Debbie
The Commission also received valuable insights and
Johnson, John May, Shelley Mullins, Mary Beth Spittel,
assistance from others in government, industry, and the
and Charles Thomson.
research community who generously offered their time
and knowledge. They include Rochelle Archuleta, Richard Finally, the Commission wishes to thank Cay Butler,
Averill, Tom Bradley, James Cosgrove, Teresa Coughlin, Hannah Fein, and Melissa Lux for their help in editing and
Allen Dobson, William Dombi, Theresa Forster, Ron producing this report. ■
Fried, Barbara Gage, Dave Gans, David Gifford, Kurt
Report to the Congress: Medicare and the Health Care Delivery System | June 2013 v

table of contents
Acknowledgments ......................................................................................... v
executive summary ........................................................................................xi
Chapters
1 Competitively determined plan contributions......................................................... 3
Introduction.............................................................................................. 5
Part D as an example of a CPC approach....................................................................... 5
Design questions under the CPC approach ..................................................................... 6
Analysis of plan bids and availability......................................................................... 15
Issues related to low-income beneficiaries..................................................................... 20
Additional considerations.................................................................................. 21
2 Medicare payment differences across ambulatory settings ........................................27
How should Medicare pay for the same ambulatory services in different settings? ....................................31
Equalizing Medicare payment rates across settings for E&M office visits............................................36
Aligning payment rates between OPDs and physicians’ offices for other types of ambulatory services.....................37
Aligning payment rates between OPDs and physicians’ offices for cardiac imaging services.............................46
Equalizing payment rates between OPDs and ASCs for certain ambulatory procedures.................................48
3 Approaches to bundling payment for post-acute care ..............................................59
Introduction............................................................................................. 65
Illustration of how services could be bundled ..................................................................68
Setting the episode benchmark for the bundle ..................................................................78
Implications of bundled payments for beneficiaries..............................................................83
Conclusion.............................................................................................. 85
4 Refining the hospital readmissions reduction program .............................................91
Introduction............................................................................................. 95
Recent trends in efforts to reduce readmission rates .............................................................96
HRRP increased the incentive to reduce readmissions ...........................................................98
Impact of the HRRP on provider payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Addressing long-term issues with the readmission policy........................................................100
Conclusions and implications for future research ..............................................................110
5 Medicare hospice policy issues .....................................................................117
Background............................................................................................121
Improving Medicare’s payments for hospice services...........................................................122
Improving hospice accountability...........................................................................130
Hospice provided in nursing facilities .......................................................................135
Future research .........................................................................................138
Report to the Congress: Medicare and the Health Care Delivery System | June 2013 vii
6 Care needs for dual-eligible beneficiaries ..........................................................145
Introduction............................................................................................149
Overview of dual-eligible beneficiaries ......................................................................149
Medicare and Medicaid spending on dual-eligible beneficiaries...................................................153
Care delivery systems for dual-eligible beneficiaries............................................................157
7 Mandated report: Medicare payment for ambulance services.....................................167
Introduction............................................................................................171
Framework to evaluate policy issues ........................................................................171
Background............................................................................................172
Growth in use of Medicare ambulance services suggests no access problems, but more
rapid growth in nonemergency services raises concerns .........................................................177
Dialysis-related ambulance transports raise fraud and abuse concerns .............................................182
Costs of providing ambulance services are difficult to isolate and policies to help cover costs
where needed are not efficiently targeted.....................................................................183
Summary and recommendations............................................................................185
8 Mandated report: geographic adjustment of payments for the work
of physicians and other health professionals.......................................................197
Introduction............................................................................................201
Arguments for and against the work GPCI....................................................................206
Empirical analysis of the work GPCI’s validity and its effects on access and spending.................................210
Recommendation........................................................................................221
9 Mandated report: Improving Medicare’s payment system for outpatient therapy services .......229
Introduction ...........................................................................................233
Medicare payment policy for outpatient therapy services ........................................................235
Medicare spending on outpatient therapy services..............................................................239
Recommendations.......................................................................................244
Appendixes
A Review of CMs’s preliminary estimate of the 2014 update
for physician and other professional services......................................................259
B Commissioners’ voting on recommendations.......................................................265
Acronyms ............................................................................................... 271
More about MedpAC
Commission members................................................................................... 275
Commissioners’ biographies............................................................................ 277
Commission staff........................................................................................ 281
viii Table of contents