Medicare Advisers Might Push Hospital Pay Hike For 2023

Inside Health Policy

December 10, 2021 8:10 pm

MedPAC commissioners on Thursday (Dec. 9) signaled support for increasing hospital and dialysis center funding in 2023, but they also favored eliminating pay bumps for primary care physicians, ambulatory surgical centers and hospice care facilities.

In their draft recommendations, commissioners also endorsed requiring the introduction of a claims modifier to delineate between audiovisual and audio-only telehealth services for PCPs, and to require hospice providers report telehealth services — both audio and audiovisual.

The COVID-19 public health emergency disrupted data collection and many of the presenters chose instead to use data from 2019. Others relied on 2020 or 2021 data with a noted caveat that the numbers varied widely from normal trends.

The commission will vote on updated recommendations at their January 2022 meeting.

Some MedPAC commissioners on Thursday raised concerns with the instability of the health care landscape, due in part to the pandemic and various Medicare pay policies that could be in flux, such as sequestration cuts, as they discussed pay rates for 2023.

Chair Michael Chernew acknowledged those concerns, and said that was part of the reason the draft recommendation under consideration would give hospitals the full pay bump currently called for under the law. The commissioners had previously suggested using pay bumps for hospitals as part of a value-incentive program.

The draft recommendation says that for fiscal 2023, Congress should update the 2022 Medicare base pay rates for acute care hospitals by the amount determined under current law.

For 2023, that is currently estimated to be 2% for both the inpatient and outpatient hospital payment systems.

But commissioners agreed with a recommendation to freeze pay for physicians and primary care providers for the 2022 calendar year. They also supported a proposal to use a claims modifier that would help differentiate between audio-only and audio-visual telehealth services.

While current law calls for no change to base payment rate, there is room for positive or negative adjustment under a merit-based payment system. The opportunity for a 5% bonus is also available for physicians and other healthcare providers in advanced alternative payment models.

The commissioners recommended no changes, but several, including Lynn Barr and Jaewon Ryu, voiced concerns that “seriously underpaying” workers has caused regional worker shortages, leading to extensive wait periods for beneficiaries seeking to change their primary care provider.

Amol Navanthe shared that his hesitancy around the pay freeze stemmed from his concern about ensuring access to care, particularly for racial and socioeconomic groups that are disproportionately affected by longer wait times for primary care providers — specifically, Black beneficiaries and other beneficiaries of color.

Dana Safran argued that adding a MIPS qualifier as an incentive was like “adding insult to injury” to overpaid and underworked healthcare providers.

The addition of a claims modifier that differentiated between audio-only and audiovisual telehealth meetings was, unlike the first recommendation, quite popular among the commissioners.

Commissioners also favored rescinding a 2% pay bump for ambulatory surgical centers, though the topic was one of the most contentious subjects of Thursday afternoon’s deliberations. The second recommendation — that the secretary require ASCs to report cost data — proved less controversial.

While in 2020 ASCs served nearly 3 million beneficiaries, many of the commissioners raised an issue with the amount of money being poured into ASCs, particularly as a means of building their popularity. Many found the excess of available capital to be wasteful — though exactly how wasteful remains rather unclear, as ASCs are not currently required to report their cost data like hospitals and other care facilities. Dana Safran felt strongly about the excess.

“Is getting more of what you don’t need really a bargain?” Safran asked.

Others were highly concerned with the interaction between Medicare Advantage and ASCs; Brian DeBusk argued that the consequences of underutilizing and overfunding ASCs are factored into the Medicare Advantage benchmark, and it drives up the price of fee-for-service care as well. Several commissioners pointed out that introducing site neutrality might be a solution to this problem, but it wouldn’t solve the overfunding issue.

There was unanimous agreement that ASCs should be required to report their cost data, an agreement that was heightened by the contention over the first recommendation. David Grabowski said that it would be incredibly difficult to know the true value of ASCs — and thus make any positive recommendations — without a firm knowledge of their cost data.

He wasn’t alone, either. Marge Ginsburg summed up the sentiments of the session in one fell swoop.

“I am constantly annoyed by the lack of cost reports,” Ginsburg said, “and I wonder if there’s a point at which we cut ‘em off at the knees, if I may be dramatic.”

Commissioners favored updating the 2022 Medicare end stage renal disease prospective pay system, which is meant to counter rising costs and the conclusion of the sequester in the new year.

As in other sectors, it was exceedingly difficult to determine quality of care during the public health emergency. Dialysis outpatient recipient mortality rates did increase — notably, according to the session’s presenter Nancy Ray, though she did not share a specific number — and emergency room visits and transplants were down for similar reasons. The percent of fee-for-service beneficiaries remains high, however, and the net number of facilities increased by 105.

Brian DeBusk noted the importance of increasing the funding for infrastructure that supports some of the nation’s most high-need individuals, despite — or perhaps because of — their high mortality rate. Pat Wang strongly agreed. She said increased funding was certainly necessary, but she also strongly advised pushing for preventative Medicaid care early in the lives of patient groups that are most at risk of developing renal failure and kidney cancer.

“When you look at the profile of these beneficiaries, they are disproportionately younger, male and Black,” Wang said. “If there is anything that we should take away from this, it’s the importance of supporting Medicaid programs in states because this is when it starts. There’s a lot that can be done with continuous coverage and good care to try to alter the course of that disease progression.”

The commission elected to support the proposal to update the 2022 base pay rate for hospice care — and to lower the aggregate cap by 20% — on the grounds that high margins and poor quality of care, coupled with high turnover and staff shortages, indicate that pure capital is not the answer. They also supported a recommendation to require hospices to report their telehealth usage on Medicare claims.

Many of the commissioners voiced their concern with measuring staff safety, beneficiary safety and well-being, and overall adequate work and living quality in hospice facilities nationwide, particularly during the pandemic.

While margins for hospice care remained at around 17% for 2020, many commissioners voiced concern about the ongoing staffing crisis, which has also caused concerns in hospitals and other care facilities. Kim Neuman noted that of the 16% of those beneficiaries eligible for hospice, 43% used it.

Most agreed upon was the argument that the current method of data measurement is outdated and must rapidly be updated in order to begin properly assessing the needs of the field, which presenters said CMS is currently working on.

Lowering the 2022 Medicare base rate by 5% and requiring home health agencies to report telehealth data within 30 days were the two proposals for home health policy and pay changes. The commissioners supported both recommendations — some enthusiastically.

Many of the commissioners felt that home health was the area most riddled with health equity issues. Some, most prominently Larry Casalino, indicated that coding for turnover as a part of measuring quality of care should play a critical role in the new recommendations. The addition would help drive employers to redistribute the margins back into the hands of the employees — they’d risk financial penalties otherwise.

Casalino said he found it outrageous that profit margins for the industry remain so high — averaging 20.2% for 2020 — while the industry turnover remains so high as well.

“This is a sector where profits are high, and employee turnover is high, so where’s all that margin going? Pay is not the only reason that implies turnover, but it’s certainly a big one,” Casalino said. “It’s outrageous that there are places that have 20% margins and 300% turnover because the money’s all being sucked up to the top and it’s not going to the people who work there — not to their salaries, not for their working conditions, and so on and so forth.”

The commissioners also endorsed reducing the base rate for inpatient rehab facility payments by 5%.

Although beneficiaries spent approximately $8 billion on fee-for-service IRF care in 2020, the number of IRF facilities declined by 3.4% in 2020. Additionally, IRFs retain a generous access to capital; the all-payer total margin for freestanding IRFs for 2020 fell at 10.2%, and IRFs functioning as an extension of hospitals also fared well.

The recommendation was quite popular, but according to Casalino, the exact same proposal was approved by the Commission the previous year, with little change documented after implementing the recommendation.

Many of the commissioners asked for more information on the extent to which IRFs functioned as a safety valve during the highest-traffic moments of the pandemic, but the information was not readily available.

The commissioners agreed with a proposal to increase the 2022 base payment rate for long-term care housing by the market basket minus the applicable productivity adjustment.

LTCH pricing per case hovered at around $45,000 in 2020. Site-neutral payment has proven to help ease pay inequities for LTCH facilities, but with around 78,000 total Medicare cases in 2020, the proposed increase was universally popular among the commissioners.