House lawmakers push back at MedPAC's proposed Medicare reforms
House lawmakers pushed back Thursday on the Medicare Payment Advisory Commission's calls to cut Medicare reimbursements to some kinds of providers, saying organizations in their districts tell them they could not survive with the proposed cuts.
MedPAC executive director Mark Miller's prepared testimony for a House Ways and Means subcommittee Thursday said the federal government could have saved $11 billion by now if it had heeded the commissions repeated proposals to cut or freeze payments to skilled nursing facilities, inpatient rehabilitation centers, long-term care hospitals and home health agencies..
In many sectors, MedPAC says profits off of Medicare patients are excessive. Home health agencies and skilled nursing facilities see profits exceed 15% on average, and have for a decade, Miller said.
"Constraining unit prices could create pressure on providers to control their own costs and be more receptive to new payment methods and delivery reform systems," his prepared testimony said.
But when Medicare puts pressure on providers, lawmakers start to feel the heat, as was clear from several committee members' responses to Miller's testimony.
Rep. Pete Roskam (R-Ill.) said an inpatient rehab facility in his district is a crown jewel, and that official there have told him their overall margin is only 3.6%, and they lose 20 cents on the dollar on Medicare patients.
Miller reassured him that there would be extra payments to the outlier pool to make up for ratcheting down the rate across the sector.
MedPAC has asked Congress to cut Medicare payments to home health agencies and inpatient rehabilitation facilities by 5% as well as freeze payments to skilled nursing facilities for two years during payment reform.
Rep. Adrian Smith (R-Neb.) told Miller that ambulance companies in his district say they need supplemental payments that benefit ambulance trips in rural areas.
Miller said that MedPAC doesn't want to end the add-on payments, but it wants to strip out 25% of geographies that now qualify, which he characterized as very close to urban areas, so that the same pool of money can be more generous "for truly isolated areas
MedPac does recommend rate increases for some categories, notably, 1.85% for hospitals. But Miller's testimony said it is "imperative" for Medicare to restrain payment rates for hospitals.
"Although hospital margins on Medicare are negative, hospital all-payer margins reached a 30-year high in 2014, averaging 7.3% nationwide," Miller's testimony said.
Miller's remarks suggested hospitals' margins may be rising partly "because of hospitals' increasing market power resulting from continued hospital consolidation."
Miller acknowledged that some rural hospitals may not have a large enough population base to cover overhead. But, he urged Congress to tailor its supplemental payments because it doesn't make sense for the same hospital to receive subsidies as a Medicare-dependent hospital and a rural hospital. The CMS should examine whether it is propping up two financially weak hospitals in the same 10-mile radius, he said.
Miller's in-person testimony was more subdued than the written report. The material highlighted the commission's frustration at Congress ignoring its recommendations on post-acute providers.
"The cost to the program of not implementing the commission's recommendations is substantial," the testimony said. "Medicare is paying more for services than it needs to ... Failure to implement payment reforms also unfairly advantages some providers over others and sends the wrong price signals, encouraging providers to furnish unnecessary care and to prefer to treat some patients over others."
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