Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

AHA Recommends Amendments to MedPAC Payment System Upgrades

By Ryan Mcaskill

In a letter, AHA expressed concern and offered alternatives to the proposed MedPAC payment system changes.

- Earlier this month, we covered Medicare Payment Advisory Commission’s (MedPAC) proposed updates for both inpatient and outpatient prospective payment system for the fiscal year 2016. The organization is will reconvene this week to further discuss the proposal and officially vote on it. Hoping to make an impact, the American Hospital Association (AHA) penned an open letter to MedPAC.

In the letter, Linda Fishman, AHA senior vice president of public policy analysis and development, said that she was speaking for nearly 5,000 member hospitals, health systems and other healthcare organizations that are part of the AHA. She asked the commissioners to consider several issues, recommendations and thoughts about the proposal that will impact hospitals, health systems, other providers and Medicare beneficiaries.

First, Fishman gave credit for MedPAC for creating the draft recommendation that would increase payment rates for acute-care hospital inpatient and outpatient prospective payment systems (PPS) by 3.2 percent. The average hospital will have an overall Medicare margin of -9.0 percent in the fiscal year 2015.

“We appreciate MedPAC’s recognition that Medicare payments will remain below the cost of providing care,” wrote Linda Fishman, AHA senior vice president of public policy analysis and development.

When it comes to the main updated inpatient and outpatient, there are three main recommendations from MedPAC. These include:

• Increased payment rates by 3.2 percent.

• Reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications (APCs).

• Set long-term care hospital (LTCH) payment rates for non-critically chronically ill cases equal to acute-care hospital rates and redistribute the savings to create additional payments.

While the AHA supports the first recommendation, it urges MedPAC to tweak or remove the other two. The differences in payment rates has an issue because the numbers behind it were calculated using 2010 data. The Centers for Medicare and Medicaid Services made “sweeping changes” in 2014, with more planned for 2015, to outpatient PPS. The AHA recommends this be withdrawn until further analysis can be completed.

For the final point, AHA believes that that focus should be taken away from reforming the long-term care hospital PPS because it would require significant backing from Congress to be accomplished. Instead, MedPac should focus on supporting effective implementation of the new, reformed long-term care hospital payment system.

• Going a step further, AHA also created eight guiding principles to use framework for evaluating proposed SSP policies. These include:

• Reimbursement should be appropriate and adequate for medically necessary inpatient services that span less than two midnights and payment should be higher than the outpatient rate for the service.

• Procedures from the “inpatient-only” list should be exclude from new policy.

• Budget Neutral.

• New policy could be designed similarly to CMS’ transfer policy, which reimburses hospitals at a graduated per-diem rate.

• Hospitals should be eligible for all add-on payments they would otherwise receive on a pro-rata basis.

• Beneficiaries having short inpatient stays should be considered inpatient and cost-sharing obligations should be calculated under Medicare Part A.

• Administrative burden should not be increased.

• Clear and consistent guidance and time for implementation is critical.


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