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Date ArticleType
3/6/2017 Payment/Reimbursement
MedPAC Advances Unified Payment System for Post-Acute Care Implementation Plan

On March 2, 2017, the Medicare Payment Advisory Commission (MedPAC) held a public meeting on its unified post-acute care (PAC) prospective payment system (PPS) work. MedPAC makes recommendations to Congress in June of each year on a range of issues, which may or may not be acted upon. Congress is not required to act upon any MedPAC recommendations nor is the Centers for Medicare and Medicaid Services (CMS). These recommendations are still in draft form. The Commissioners will vote on final recommendations to be included in the June report at next month's meeting.
While previous Commission efforts focused on the design of policies within a unified PAC PPS, today's discussion focused on issues related to how the new payment system could be implemented. The Commissioners considered the following draft recommendation:
The Congress should direct the Secretary to:

• Implement a PPS for PAC beginning in 2021 with a three-year transition.
• Lower aggregate payments by 3 percent, absent prior reductions to the level of payments.
• Concurrently, begin to align setting-specific regulatory requirements.
• Periodically revise and rebase payments, as needed, to keep payments aligned with the cost of care.

Additionally, the Commissioners considered the following language, which would be included as text below the recommendation:

• If the Congress has already lowered payments to PAC providers, the Congress should compare the reduction already taken with the recommended amount and make an additional reduction if necessary to reach the 3 percent.
• The 3 percent reduction would be taken in a single transaction at the beginning of the transition.
• Consider allowing providers to bypass the transition.
• MedPAC will continue to monitor provider performance and make subsequent recommendations if necessary.

And finally, the Commissioners considered the following implications of the draft recommendation:

• Spending: Will be lower compared with current policy.
• Beneficiaries: Providers will be more willing to treat all types of patients. Patients with complex medical care needs will be easier to place at discharge from the hospital.
• Providers: Payments will be redistributed to providers. The impacts will vary widely depending on providers' costs, mix of patients, and current treatment practices. Payments will be more equitable, with narrower differences in profitability across different types of stays.

Commissioners' Discussion
In its June 2016 Report to Congress, MedPAC made several conclusions about the implementation of a unified PAC PPS, including that it was feasible and could be implemented sooner than the 2024 date outlined in the Improving Medicare Post-Acute Care Transformation (IMPACT) Act using administrative data only; that it could fold functional assessment data into the risk adjustment when the data become available; and it could begin to align certain regulatory requirements across provider types. The slides from today's meeting are available here
The Commissioners' discussion today focused on three areas: timeline of a transition to a unified PAC PPS; the level of aggregate PAC payments; and the need to make periodic refinements to the PPS.

Commissioners were generally supportive of an implementation timeline sooner than was outlined in the IMPACT Act, and they supported a three-year transition period. Specifically, they assumed that if Congress passed legislation in 2018, that the three-year transition period could begin by 2021 with full implementation by 2024. The first two years of the transition would include blended rates, with new payment rates fully implemented by the final transition year. A few Commissioners raised the issue of alternative payment models (APMs), and asked that the staff include a discussion in the chapter outlining how the new payment system would fit in and interact with APMs, such as bundled payments.
The staff also presented an option that would allow providers to transition to the new payment system immediately if they chose to do so. They went on to explain that allowing such an option would likely cause an increase in total PAC payments, as those providers who would see an increase in average payments under the unified PAC PPS would be the most likely to opt for immediate transition, while others would opt for the three-year transition. Nevertheless, the Commissioners were generally supportive of allowing an option for providers to transition immediately. Staff will include a discussion of such an option in the chapter.
Aggregate PAC Payments
In the Chairman's draft recommendation above, the Commission calls for reducing aggregate PAC payments by 3 percent across the board with the beginning of the implementation of a unified PAC PPS. Many Commissioners were supportive of increasing the cut to 5 percent, citing staff research that shows that average payments would still exceed average costs by a range of 8-10 percent under a 5 percent reduction.
Periodic Refinements to the Payment System
The Commissioners were generally supportive of allowing the Secretary to make periodic refinements to the payment rates under a unified PAC PPS. There was little discussion on the matter during the meeting.
Other Discussion Items
The Commissioners also discussed the need for certain regulatory reforms with the implementation of a unified PAC PPS. Commissioners specifically mentioned the IRF 60 percent rule and the LTCH average length-of-stay requirements as example regulations that would need to be waived under a new payment system. One commissioner also raised the issue of aligning the regulatory framework of a unified PAC PPS with multitude of different state regulations. Staff plans to include a broader discussion of necessary regulatory reforms in the chapter.
Next Steps
The Chairman indicated that staff would make refinements to the chapter and draft recommendations, and the Commissioners would vote on final recommendations at their April meeting. As MedPAC provides more detail on the proposed payment system, AHCA/NCAL will provide members with additional details. Please contact Mike Cheek, Senior Vice President of Reimbursement Policy & Legal Affairs, for more information or with any questions.