Medicare Compliance & Reimbursement

The Medicare Payment Advisory Commission (MedPAC) is no friend to home health agencies and skilled nursing facilities this year.

On Feb. 28, MedPAC formally submitted its March 2008 Report to the Congress -- Medicare Payment Policy, which spans more than 350 pages and makes several recommendations that may help some Part B providers' payments and sorely damage others.

Among the recommendations is one that would increase the Medicare Physician Fee Schedule conversion factor for 2009 by 1.1 percent for physician services, giving physicians a boost.

To fund physician pay boosts, the MedPAC advises Congress to eliminate the updates to payment rates for skilled nursing facilities and home health services in 2009.

"This would be terribly problematic for most of the SNFs and home health agencies out there," says consultant Heather Corcoran in Louisville, KY. "With rising costs, many of these agencies can't afford to forego an annual update and could end up going out of business."

Other cuts: In addition, MedPAC advises Congress to "reduce the indirect medical education adjustment in 2009 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio," the report notes. MedPAC recommends using the funds saved in this category to create a quality incentive payment program.

P-4-P: MedPAC's report strongly pushes for a pay-for-performance system that would apply to outpatient and inpatient hospital payments. "The Commission believes it is critical that the Congress authorize CMS to implement a quality pay-for-performance system in 2009," the report says.

How it works: Hospitals with higher quality scores or better overall quality improvements would collect more money than those with lower scores.

Despite the fact that MedPAC tries to frame P-4-P as something really positive, most consultants see it as another administrative burden that's an excuse to pay doctors less, says consultant Randall Karpf of East Billing in East Hartford, CT. "This could become a huge headache for healthcare practitioners everywhere."

ESRD: Outpatient dialysis services also get a boost, with the report noting that "under the current forecast of the ESRD market basket (2.5 percent), the Commission's recommendation would update the composite rate by 1.0 percent in 2009."