Medicare Compliance & Reimbursement
MedPAC Report Pins Payment System Flaws On 'Overvalued' Services
Payment systems for eight different provider types may begin major reconstruction in 2007--if the Medicare Payment Advisory Commission has its way.
In MedPAC's March 1 Report to the Congress: Medicare Payment Policy, the commission focuses on "improving Medicare payment accuracy and calibrating payment adequacy to the efficient provider." MedPAC defines "efficient providers" in its report as providers who "use fewer inputs to produce quality outputs."
The report outlines recommendations for payment system changes that would affect physicians, inpatient hospitals, outpatient hospitals, dialysis, skilled nursing facilities, home health, long-term care hospitals and inpatient rehabilitation facility services. MedPAC advises a payment freeze for SNFs, HHAs, LTCHs and IRFs for 2007.
The MedPAC report follows closely on the heels of a recent Centers for Medicare & Medicaid Services report on health care spending; CMS projects that health care spending will surpass $2 trillion in 2006, despite its slowing growth rate. This would result in the health care portion of the Gross Domestic Product to climb from 16 percent in 2004 to 20 percent by 2015, according to a recent Health Affairs report.
Rising health care spending, the new Medicare drug benefit and the oncoming wave of retiring baby boomers are a lethal combination--one that could cause Medicare to soak up an even more substantial share of the GDP than it does already, warns MedPAC.
The best way to avert the problem is to continue pulling back the reins on spending growth and to implement greater efficiencies within the system, says MedPAC. In the MedPAC report, the commission recapitulates its proposals to improve Medicare's program value and efficiency through resource measurement and quality improvement initiatives. But these initiatives can't wait--policymakers need to act now, the commission urges.
RVU System Flaws Overvalue Some Services
The report also points out serious flaws in the Relative Value Unit system that CMS uses to calculate physician reimbursement. The current RVU system "does not do a good job of identifying services that may be overvalued," charges MedPAC. To address the problem, the commission recommends setting up a panel of experts to help CMS identify these "overvalued" services.
MedPAC suggests a 2.8-percent update to physician payments based on practice costs--a move that American Medical Association Board chair Duane Cady calls "plain common sense," in a March 1 statement.
The commission's recommendations didn't fail to ruffle other providers' feathers, however. "For MedPAC to suggest anything that continues to undercut the financial underpinnings of the home health benefit is simply beyond the pale at a time when the first wave of the baby boomers will begin retiring in the next 18 months and will be depending on Medicare," criticizes American Association for Homecare's COO Sue Mairena in a March 1 statement. "Simply put--the freeze is unwarranted, unjust and unsound."
But Medicare can--and should--take the lead in initiating changes to the health care system, MedPAC maintains. "Medicare relies on providers and health plans that care for the entire population, not just Medicare beneficiaries, and thus broad trends in the health care system affect the environment in which the program operates," the commission points out. "But to encourage more thorough improvements in quality and efficiency, Medicare should work in collaboration with other payers."
MedPAC expects to see a 0.9-percent improvement for productivity in 2007, which it incorporates into its update and payment recommendations. In doing so, the commission links Medicare payment changes directly to taxpayers' productivity gains. "Market competition constantly demands improved productivity and reduced costs; as a prudent purchaser, Medicare should also require productivity gains each year," advises the commission.
To view the entire MedPAC report, go to www.medpac.gov/home/pubpdf.cfm?material_id=396.
Medicare Compliance & Reimbursement
- REIMBURSEMENT:
MedPAC Report Pins Payment System Flaws On 'Overvalued' Services
Congress must put the brakes on health care spending, and Medicare should lead the way.
Payment [...] - PATIENT RIGHTS:
HHAs Brace For An ABN Avalanche
Reasons to give notices just multiplied.
Home health agencies will be taking on an even heavier [...] - REGULATIONS:
Fast Facts--Home Health ABNs
Insufficient notices can land providers in hot water.
Providers who don't understand the ins and outs [...] - BILLING:
New CMNs, DIFs Raise Questions Of Medical Necessity
Physician education is the key to good documentation.
Documentation of medical necessity remains a thorny issue [...] - PART D:
Pharmas Work To Cover 'Doughnut Hole' For Low-Income Benes
Coalition lacks major players--kickback issues could arise.
In an attempt to forestall potential problems with the [...] - EMERGENCY MEDICINE:
Billing New Moderate Sedation Codes Now Could Pay Off Later
Medicare is keeping watch over providers' code usage.
Medicare never paid for conscious sedation in the [...] - INDUSTRY NOTES:
Demonstration Project Offers New Outlook For Disease Management
Plus: Home health spending increase spell more bad news for HHAs.
The Centers for Medicare & [...] - FRAUD & ABUSE:
Hospice Chains Shell Out $13 Million Each In Settlements
Lawsuit, DOJ take bites out of VITAS and Odyssey earnings.
The backlash against the booming hospice [...] - COVERAGE:
The Future Looks Bright For 'Mini-Medical' Plans
Escalating health care costs push employers to consider bare-bones options.
Consumer-directed health care coverage isn't the [...]
