On March 13, 2015, the Medicare Payment Advisory Commission (“MedPAC”) released its March 2015 “Report to the Congress, Medicare Payment Policy.” MedPAC is required by law to review on an annual basis Medicare payment policies and make recommendations to the Congress.

The 2015 report includes payment policy recommendations for ten provider/supplier types paid under Medicare fee-for-service. The report also reviews the status of Medicare Advantage plans and Part D prescription drug plans.

In this report MedPAC continues its advocacy for a site-neutral Medicare payment policy.  Specifically, MedPAC would reduce or eliminate differences in payment rates between hospital outpatient departments and physician clinics for selected ambulatory services. Further, MedPAC recommends that Congress direct the Secretary of Health and Human Services to eliminate the differences in payment rates between inpatient rehabilitation facilities (“IRFs,” both hospitals and units) and skilled nursing facilities for certain conditions.

The reduction in IRF payments would be phased-in over three years and IRFs would receive some relief from regulations specifying the intensity and mix of services for site-neutral conditions. Long term care hospital base payment rates for non-chronically critically ill (“CCI”) cases would be reset to be equal to those of acute care hospitals and the savings would be redistributed to create additional inpatient outlier payments for CCI cases in acute care hospitals.

This change in payment would also be phased-in over a three-year period.  MedPAC advocates that Congress repeal the sustainable growth rate payment system for physicians and replace it with a ten-year path of statutory fee schedule updates. The fee schedule updates would include higher payments for primary care services than for specialty services.

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