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MedPAC Releases Annual Report to Congress

The Medicare Payment Advisory Commission (MedPAC) released its annual report to Congress on Medicare and the health care delivery system.

The report provides updates on the Hospital Readmissions Reduction Program (HRRP), off-campus emergency department (ED) access, the physician fee schedule, population-based quality measures and incentives, and Medicare accountable care organizations (ACOs), among other topics.

Hospital Readmissions Reduction Program

The report concludes that the HRRP contributed to a decline in readmissions between 2010 and 2016. The commission found no evidence that the decline had a negative effect on mortality.

Off-Campus Emergency Departments

The report also outlines availability of and access to hospital ED services, with particular attention to access in rural areas, where a single hospital migh be the sole provider of ED care. To improve access, MedPAC recommends a new payment model to allow Medicare to pay for emergency services at standalone EDs in isolated rural areas.

The report also recommends cutting payments to urban off-campus EDs by 30 percent. This recommendation applies only to EDs within six miles of an on-campus hospital ED.

Physician Fee Schedule

The report notes underpayment for evaluation and management services through the physician fee schedule, including contributing factors and potential corrective actions. MedPAC builds on its previous recommendations in this area and describes a new approach to rebalance the fee schedule to accurately price evaluation and management services.

Quality Measures and Incentives

A chapter of the report is dedicated to applying MedPAC’s principles on quality measurement to population-based quality measures and hospital quality incentives. The commission recently finalized a set of principles stating that quality measurement should be patient oriented, encourage coordination, and promote delivery system change.

In addition to applying these principles to population-based measures, the commission uses them to design a new hospital quality incentive program that combines aspects of existing programs. MedPAC recommends consolidating existing hospital quality incentive programs into this one comprehensive program, which would be easier to administer and better align with the commission’s principles.

Medicare ACOs

The final chapter of the report focuses on quality and clinical performance of Medicare ACOs, which originally were created to help moderate growth in program spending.

MedPAC found that two-sided-risk Medicare ACOs tend to show success against their benchmarks for both quality and cost. However, some analysts say those savings might be understated. The commission also outlines long-term challenges, including asymmetric models and setting performance benchmarks.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Rachel Schwartz is a policy associate at America's Essential Hospitals.