The Medicare Payment Advisory Commission today recommended that Congress provide a current law update for the hospital inpatient and outpatient prospective payment systems in fiscal year 2023, currently estimated at 2.5% for inpatient and 2.0% for outpatient.

In other action, MedPAC recommended that:

  • Congress reduce 2023 payment rates for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities by 5%;
  • Congress update 2023 payment rates for long-term care hospitals by the amount specified in current law;
  • Congress update 2023 Medicare payment rates for physician and other health professional services by the amount specified in current law, and the Department of Health and Human Services require clinicians to use a claims modifier to identify audio-only telehealth services;
  • Congress eliminate the 2023 update to the Medicare conversion factor for ambulatory surgical centers, and the Department of Health and Human Services require ASCs to report cost data; and
  • Congress eliminate the 2023 update to Medicare base payment rates for hospice providers, and the Department of Health and Human Services require hospices to report telehealth services on Medicare claims.

In addition to making payment recommendations, MedPAC also presented their prototype value-based purchasing program for post-acute care providers. As required by the Consolidated Appropriations Act, MedPAC will include a description of their PAC Value Incentive Program (VIP) along with an evaluation of an illustrative model of the prototype in their March Report to Congress.  MedPAC’s VIP is based on a small set of performance measures, which would be informed by data pooled across three years to ensure that providers had enough volume to produce reliable results. Performance would be evaluated based on comparisons of performance within settings—as opposed to across different post-acute settings — and the recommended 5 percent withhold to fund the program would be paid back out entirely in the form of incentive payments.  
In evaluating its prototype, MedPAC found that nonprofit and hospital-based providers tended to receive larger positive payment adjustments. The Commission also observed differing effects of social determinants of health — determined by proportion of dually eligible beneficiaries served — by setting, finding that HH agencies and LTCHs with patients demonstrating higher levels of social risk tended to perform better than their peers, while SNF and IRF providers with similar patients tended to perform worse. Because of these findings, the Commission raised several questions about how to account for social risk in the VIP. Additional details and findings will be described in the forthcoming Report to Congress.

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