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MedPAC Releases March Report to Congress

In its March report to Congress, the Medicare Payment Advisory Commission (MedPAC) addressed several issues of importance to essential hospitals, including hospital inpatient and outpatient services, hospital quality incentive programs, and alternatives to opioids.

Hospital Inpatient and Outpatient Services

In 2017, inpatient payments increased by 2.2 percent, or $2.6 billion, and outpatient payments increased by 8.1 percent, or $4.9 billion. However, the report notes hospitals continued to see a trend of negative average Medicare margins.

The chapter also explores several measures of Medicare payment adequacy, to judge whether payments in 2019 are sufficient for relatively efficient hospitals, including:

  • beneficiaries’ access to care;
  • changes in the quality of care;
  • hospitals’ access to capital; and
  • the relationship of Medicare payments to hospitals’ costs.

Based on its assessment of these metrics, MedPAC recommends that Congress increase hospital base payments by 2 percent in 2020, compared with an expected statutory update of 2.8 percent.

Hospital Quality Incentive Programs

The commission also explores the creation of a single, outcome-focused, quality-based payment program for hospitals to replace Medicare’s four hospital quality incentive programs: the Hospital Inpatient Quality Reporting Program, Hospital Readmissions Reduction Program, Hospital-Acquired Condition Reduction Program, and Hospital Value-based Purchasing Program.

The new proposed program — the Hospital Value Incentive Program (HVIP) — would adjust hospital payments by performance on quality and cost measures. The HVIP program is based on a set of principles for quality measurement, developed by MedPAC, and five measures:

  • readmissions;
  • mortality;
  • Medicare spending per beneficiary;
  • patient experience; and
  • hospital-acquired conditions.

To account for disparities across providers, MedPAC recommends that HVIP include a peer-grouping methodology based on hospitals’ share of beneficiaries with full dual eligibility for Medicare and Medicaid.

Opioids and Alternatives in Hospital Settings

As mandated in the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act of 2018, the commission provides Congress with a report on opioids and their alternatives in hospital settings.

In its March report to Congress, MedPAC outlines Medicare payment and existing incentives for prescribing opioids and non-opioid alternatives in hospital settings. It also discusses how Medicare monitors opioid use and policy options for tracking opioid use in hospitals.

MedPAC recommends improving data and tracking the use of opioids and non-opioid alternatives  throughout the Medicare program, including in Parts A, B, and D.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

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

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