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Cori Uccello

MedPAC votes for site-neutral Medicare payments

By Virgil Dickson
Posted: January 16, 2014 - 4:30 pm ET

The Medicare Payment Advisory Commission unanimously voted to recommend that Congress narrow the differences in what the program pays providers depending on where a service is delivered. The change would mean a 0.6% drop in Medicare revenue for hospitals.

MedPAC also voted to recommend that Medicare Advantage carriers cover hospice stays.

The recommendations will appear in the advisory panel's annual March report to Congress. While lawmakers are not obligated to accept MedPAC's recommendations, they often shape congressional debates and actions.

To do away with payment inconsistencies, the panel suggested reducing the differences in compensation rates between hospital outpatient departments and physician offices for a variety or services.

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For instance, this year Medicare pays about 140% more for an echocardiogram offered in a hospital outpatient department than it does for the same service in a freestanding physician's office. Beneficiaries also pay higher co-payments for the same services in different settings.

These adjustments, the panel said, would reduce Medicare spending and beneficiary cost-sharing by $1.1 billion a year.

“We need to stop providing incentives to provide care in higher-cost settings,” said Cori Uccello, a panel member and senior health fellow of the American Academy of Actuaries.

The commission also recommended bringing payments to long-term acute-care hospitals in line with those paid to acute-care hospitals for patients who spend fewer than eight days in an intensive-care or critical-care unit. The panel suggested that the change be phased in over two years, ending in 2017. The proposal would reduce Medicare payments for long-term care hospitals by $2 billion in the first year that's fully implemented.

In addition to saving money, the hope is the recommendation will drive better collaboration between long-term and acute-care hospitals to ensure that a patient is getting the right care, in the right place and from the right provider, said Dr. Craig Samitt, executive vice president of HealthCare Partners, a California-based physician practice owned by DaVita.

A final recommendation related to more harmonized Medicare reimbursement involves having Congress tell the HHS secretary to make the payments made to employers' group Medicare Advantage plans, which are plans given to retirees whose Medicare coverage is supplemented by their former employer or union, more consistent with non-employer MA plans.

MedPAC has found that current bidding policies mean these plans are paid are paid about 10% more on average than non-employer affiliated plans. The panel said addressing the gap could save Medicare $250 million to $705 million in the first year of implementation and $1 billion to $5 billion over a five-year period.

Some MedPAC members raised concern that employers could raise premiums for employees or discontinue the plans if carriers raise rates in response to the change.

The panel also voted to recommend requiring Medicare Advantage carriers to cover hospice stays, something the plans have never done since their inception in 1982. For the past 32 years, consumers have had to obtain separate Medicare fee-for-service coverage for hospice care.

The change would mean that Advantage enrollees could continue to get curative treatments when they choose to enter hospice care. Under Part A, patients must end treatment such as chemotherapy when they begin receiving hospice care.

Follow Virgil Dickson on Twitter: @MHvdickson

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