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 MedPAC Considers Sequential Stays Under Unified PAC Payment Model

As part of its ongoing work to flesh out how a unified payment system for post-acute care (PAC) would function, the staff of the Medicare Payment Advisory Commission (MedPAC) on Oct. 5 examined the issue of how to pay for sequential stays and align regulatory requirements for PAC providers.

Earlier this year, MedPAC recommended to Congress that a new PAC prospective payment system (PPS) be in place starting in the year 2021, with a three-year transition period. The commission also supported measures to lower the aggregate level of PAC payments by 5 percent, absent prior reductions, concurrently begin to align regulatory requirements, and revise and rebase PAC payments to keep reimbursement aligned with cost on an as-needed basis.

The thrust of the unified payment model is to have Medicare program payments to PAC providers—skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long term care hospitals—based on patient characteristics not on the site of service. The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT) requires the commission to develop a prospective payment system (PPS) spanning the four PAC settings, using the uniform assessment data gathered during the Centers for Medicare & Medicaid Services’ Post-Acute Care Payment Reform Demonstration.

IMPACT also requires the secretary of Health and Human Services to collect and analyze common patient assessment information and report to Congress on a recommendation for a PAC PPS. The secretary’s report is expected sometime in 2022.

In its newest report on Oct. 5, MedPAC staff said many Medicare beneficiaries transition from one PAC stay to another as their care needs change, which often means they are moving from higher- to lower-intensity settings. Over the course of sequential stays, average cost of a stay is likely to decline in conjunction with a patient’s lessening care needs. As a reminder, staff said under a PAC PPS these payments would be factored on patients’ characteristics, not where they received the care.

The question among these shifts in care needs is how a PAC PPS would pay for sequential stays so that referrals to a second PAC setting, be it SNF, HHA, or IRF, are neither “encouraged or discouraged.”

The staff said the reason to care about the costs of sequential PAC stays is because if payments are not accurate providers may base their care on financial reasons rather than what is best for the patient. Also, there could be unnecessary PAC that “exposes beneficiaries to risks associated with care transitions and raises program spending.”

MedPAC’s report also addressed how the different PAC providers have regulatory requirements that are not uniform. The staff recommended that in the near term, certain regulations be waived that are considered setting-specific. This could include regulations that distinguish levels of care like the IRF 60 percent rule, as well as rules that limit coverage like the SNF three-day stay requirement.

Longer term, the report said, there should be the development of a common core set of requirements along with a special set of additional requirements for unique care cases like those patients on prolonged ventilator dependence or suffering from severe wounds.

Staff said the changes to how PAC providers are regulated is needed because under a PAC PPS, providers that treat similar patients will receive similar payments and “should face similar requirements.” Payment reforms will also give high-cost settings flexibility to reduce costs and all providers the opportunity to treat a broad mix of cases, the MedPAC report added.

On another issue, MedPAC commissioners came out strongly against a separate payment model, the Merit-based Incentive Payment System (MIPS), which is part of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. That law, which passed with strong bipartisan support, replaced the Sustainable Growth Rate (SGR) formula.

Under MACRA, payments to physicians and other clinicians would come via MIPS or advanced Alternative Payment Models (APMs). The commission and its staff, through a report discussed on Oct. 5, have issue with the MIPS part of the dual payment pathway, mainly based on its complexity and belief the statistical models will not work.

MedPAC staff offered instead an alternative called the Voluntary Value Program, which would replace MIPS with a system for all clinicians that would withhold a portion of their fee schedule dollars for placement in a pool. Physicians/clinicians would then get to select one of three options: be measured with a large cohort of clinicians and be eligible for value payments, participate in an advanced APM model, or lose the withheld fee payments.

MedPAC did not take a formal vote on the MIPS report or the PAC PPS sequential stays issue. The commission is an advisory board, and Congress is not obligated to follow its recommendations.

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