At a Sept. 5 public meeting, the Medicare Payment Advisory Commission (MedPAC) discussed the program’s financial health, cost sharing for outpatient services at critical access hospitals, and measurements of rural health care provider quality.
MedPAC typically meets publicly seven times per cycle, while developing their statutorily required semiannual reports to Congress. Discussion signaled future steps the commission could recommend in their reports to Congress.
Context for Medicare Payment Policy
MedPAC’s upcoming March 2025 report to Congress will include a significant review of Medicare’s overall financial situation. Commissioners summarized the major contributing factors to changes in Medicare spending, including the intensity of services hospitals are providing to patients, economy-wide inflation, and the increasing share of Americans who qualify for Medicare. The presentation also discussed challenges related to ongoing workforce shortages, as well as the increasing role of foreign-trained health care professionals.
Commissioners discussed their interest in:
- Better understanding the breakdown of specialties foreign medical school graduates are filling
- Researching geographical distribution of non-physician health care providers
- The role of MediGap coverage and why some beneficiaries opt out
- The provider star rating system and the rates at which many beneficiaries still see lower-rated providers
- Challenges for a beneficiary switching from a Medicare Advantage plan (Part C) to traditional Medicare
Cost Sharing for Outpatient Services at Critical Access Hospitals
The second panel focused on the critical access hospital (CAH) program, authorized in 1997. CAH designation entitles qualifying hospitals to receive payments on a cost basis, as well as higher prospective payments rates for both inpatient and outpatient services. However, MedPAC has found these higher payments are funded by higher beneficiary cost sharing liabilities.
CAH coinsurance is equivalent to 20 percent of charges — where charges are variable list prices, rather than line items set by the Centers for Medicare & Medicaid Services (CMS) —while prospective payment system (PPS) hospital coinsurance is equal to 20 percent of the payment rate. The presentation discussed the lack of cap on coinsurance for CAH services. Compared with a charge at a PPS hospital, a charge for the same line item at the same rate at a CAH could result in significantly higher coinsurance for a beneficiary, a higher payment for the hospital, and a lower cost paid by Medicare.
Commissioners proposed one potential alternative model that would set coinsurance at 20 percent of the payment rate, consistent with how supplemental payments work at sole community hospitals. Commissioners discussed whether outpatient coinsurance should continue to be based on charges and whether to cap CAH coinsurance. Conversation indicated commissioners’ potential interest in:
- Proposing to change payment structure for critical access hospitals
- Basing CAH coinsurance on payment rate
- Better understanding how the CAH outpatient prospective payment system (OPPS) coinsurance cap affects beneficiary access to OPPS services
- Establishing avenues for CAHs to access quality-based payments
- How urban hospitals are using rural reclassification and how future MedPAC recommendations could reduce reclassification rates
Medicare Measurement of Rural Provider Quality
MedPAC discussed how Medicare quality measurements need to adequately measure patient outcomes across all communities. While rural providers face specific challenges with low population density and long travel times affecting quality measurements, MedPAC commissioners affirmed their position that Medicare should evaluate all providers for all services they provide — including both emergency and non-emergency services — and that Medicare should target technical assistance to low-performing providers.
Additionally, MedPAC discussed how Medicare Advantage plan quality is reported on a contract-wide basis, which can include millions of beneficiaries on the most widely utilized plans. In 2020, MedPAC recommended replacing the Quality Bonus Program with a value incentive program to mitigate this shortcoming.
Commissioners expressed interest in:
- How low sampling rates in rural accountable care organizations do not provide a quantitatively meaningful measure of quality
- Requiring all hospitals, including CAHs, inpatient rehabilitation facilities, and other non-PPS hospitals to participate in value-based reporting and quality programs
- How different standards for rural and nonrural facilities can be discriminatory
- How incident-to billing disguises data, and a legislative remedy to remove it
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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