MedPAC discusses report on unified post-acute payment system

The Medicare Payment Advisory Commission today discussed its pending report to Congress on a prototype payment system that, if ultimately approved by Congress, could replace the current payment systems for home health, skilled nursing, inpatient rehabilitation and long-term care hospital services. The prototype, mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014, includes separate payment tiers for “institutional” and “home-based” post-acute care; sets payments based on a patient’s pre-PAC clinical profile; and includes high-cost and short-stay outlier components. According to MedPAC staff, the prototype would produce less variation in PAC margins, decrease average payments for physical rehabilitation, and increase payments for medical and medically-complex services. However, it also has difficulty setting accurate payments for the highest-acuity patients, providers with high shares of low-income patients, and short-stay cases currently treated in IRFs and LTCHs, they said. Commissioners suggested recommending that the Centers for Medicare & Medicaid Services test the prototype with PAC volunteers, if the agency’s current authority allows. MedPAC expects to vote on a final report in April for submission to Congress in June. CMS is then charged with using the prototype to develop a new, unified payment system for PAC, which will be presented to Congress for consideration in 2023.