MedPAC Recommends an Accelerated Implementation of PAC PPS
April 19, 2017 03:45 PM
The Medicare Payment Advisory Commission (MedPAC), the congressional advisory body on Medicare payment policy, is recommending that Congress legislate the establishment of a single prospective payment system for all post-acute care services, otherwise known as PAC PPS.
Under the ImprovingMedicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), MedPAC was ordered to analyze whether a PAC PPS could be developed, what it might look like, and how it would be implemented. Over the last 18 months, MedPAC has been working on that project and in a June 2016 report MedPAC advised that PAC PPS was doable.
In its most recent PAC PPS recommendations, finalized by the commissioners on April 7, MedPAC indicates that PAC PPS should be implemented sooner rather than later -- as early as 2021. Furthermore, MedPAC recommends that Congress consider phasing it in, possibly through a payment system blending in the first years. In addition, MedPAC recommends that PAC PPS include authority to immediately reduce most PAC payment rates and to rebase rates to achieve average cost reimbursement.
The proposed PAC PPS would rely mostly on existing data already obtained by home health agencies, skilled nursing facilities, long term care hospitals, and inpatient rehabilitation facilities. Hospice is not included in PAC PPS. MedPAC believes that in doing so, the institution of PAC PPS can and should be accelerated. While many details of the PAC PPS are glaringly absent, MedPAC is clear that home health services can fit within it simply by reducing the payment rates for care in institutional settings to account for the lower cost of services. MedPAC recommends the use of the same case mix adjustment model for all four sites of post-acute care with payment amounts being site-neutral, except that home health would get less than institutional care because room and board is not a Medicare-covered cost in the patient’s home.
NAHC has numerous concerns with the MedPAC proposals.
First, experiences are strong that there are cost factors present in home health care that are not present in the controlled setting of an institution. For example, home health agency care is often, but not always, supplemented by informal caregivers such as family and friends. Travel time and travel costs also affect the cost of home health services while those costs do not exist in institutional care. Notably, MedPAC does not offer guidance on how to calculate the home health post-acute care payment rates. Instead, it simply refers to its opinion that home health services costs less, its recommendations to cut payment rates by 5% in 2018, and its March 2017 recommendations to rebase rates to average costs.
Second, the PAC PPS would also significantly redistribute payments away from patients receiving therapy services and towards patients with high nursing needs. The impact of such a change is not fully known, but past experiences indicate that care access will be affected for the therapy patient populations.
Third, MedPAC has not addressed whether the PAC PPS model would also apply to home health patients who have not entered into care by way of a prior inpatient hospital stay. Currently, more than 50% of the Medicare-covered home health episodes of care involve community referral rather than post-acute care.
The IMPACT Act does not mandate the institution of a PAC PPS, nor does it authorize Medicare to do so by way of regulation. Congress would have to pass legislation to do so. As such, there will be opportunities for NAHC and other stakeholders to voice their views on the proposal.
The MedPAC public hearing documents and a transcript of the April 7 proceedings is available at http://medpac.gov/-public-meetings-. A comprehensive report to Congress on PAC PPS is expected in June.