MedPAC Mulls Removal of ASC Payment Boost, Increase for Hospitals
The commission may also recommend increased ASC payment transparency and an increase in Medicare rates for physicians as specified in current law.
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By - A committee that advises Congress on how to adjust Medicare reimbursement rates recently mulled over payment recommendations for 2020and beyond, including freezing ambulatory surgery center (ASC) payment updates and increasing rates for hospitals.
In a public meeting on Dec. 5, the Medicare Payment Advisory Commission (MedPAC) shared that approximately 5,700 ASCs treated 3.5 million Medicare beneficiaries in 2018. That year, Medicare fee-for-service spent $4.9 billion on care from ASCs in 2018.
ASCs have benefits compared to hospital outpatient departments, Dan Zabinski, PhD, MedPAC senior analyst, said at the meeting. ASCs have lower payment rates and cost sharing compared to their hospital-based peers and the care settings exhibit efficiencies for patients and physicians, he explained.
However, concerns that the ASC business model, which is largely physician ownership, could incent greater volumes of surgical procedures prompted Zabinski and colleagues to reconsider the current 2.6 percent payment update to ASCs in 2020.
MedPAC proposed recommending the elimination of the 2.6 percent Medicare payment update to ASCs next year, according to a report in Bloomberg Law. The commission is also planning to recommend that Congress require ASCs to submit annual cost reports to CMS.
Currently, ASCs do not have to submit cost data to CMS, which makes it difficult to determine if Medicare reimbursement rates to ASCs are accurate, Zabinski explained at the meeting.
MedPAC develops Medicare reimbursement recommendations based on factors like beneficiaries’ access to care, quality of care, and Medicare payments relative to provider costs. However, the lack of information on ASC costs makes it harder to recommend accurate Medicare reimbursement rates for the provider.
ASCs appear to be doing well financially. The outpatient care centers had solid access to capital in 2018 as evident by the 2.6 percent growth in number of ASCs, Zabinski reported. ASCs also saw strong growth in Medicare revenue, with Medicare payments increasing 4.9 percent from 2013 through 2017 and 7.4 percent from 2017 to 2018.
However, without access to more information on ASC revenue and profit margins, MedPAC Chairman Francis Crosson said the commission has little choice but to recommend no payment update, Bloomberg Law reported.
MedPAC also considered in the Dec. 5 meeting whether to recommend a 2.0 percent payment increase for hospitals in 2021 or a full 2.8 percent update, according to a report from the American Hospital Association.
A presentation from MedPAC principal policy and senior analysts showed that Medicare fee-for-service payments to about 4,700 acute care hospitals totaled approximately $201 billion in 2018, representing a 3.6 percent increase compared to the previous year. The boost included a 7.2 percent increase in outpatient service payments and a 1.1 percent increase in inpatient stay payments, as well as 10.4 percent growth in supplemental payments.
Overall Medicare margins at hospitals receiving reimbursement through the Inpatient Prospective Payment System (IPPS) increased in 2018, the analysts added. Medicare margins varied, but increased for most hospital groups, with relatively efficienct hospitals having higher margins and better performance on quality of care measures, including mortality and readmission rates.
Starting in 2020, current law will substantially increase IPPS operating rates, the analysts added. Combined with updates to Outpatient Prospective Payment System (OPPS) rates, hospitals currently face a 2.6 percent payment increase in 2020 and an estimated 2.8 percent increase in 2021.
The analysts advised MedPAC to recommend Medicare reimbursement rates that are high enough for hospitals to maintain access to care, which was generally positive. However, they also pushed for rates that maintain a level of financial pressure on hospitals to limit cost growth.
According to the AHA, MedPAC members proposed to achieve those goals by recommending a 2.0 percent increase in hospital payments in 2021, with an additional 0.8 percent increase allotted through MedPAC’s proposed Hospital Value Incentive Program (HVIP) – the commission’s idea of an outcome-focused value-based payment program – or a full 2.8 percent increase in 2021 with an additional increase allotted to the HVIP or “efficient” providers.
MedPAC will vote in January 2020 on the proposals, as well as a recommendation that Congress approve the increase to 2021 payment rates for physicians as specified by current law.
