MedPAC Releases Medicare Payment Policy Report for 2009

On February 29, 2008, the Medicare Payment Advisory Commission (MedPAC) issued a News Release announcing the release of its Report to Congress: Medicare Payment Policy for 2009 (Report).  In the Report, MedPAC makes updates and policy recommendations for certain Medicare fee-for-service payment systems for 2009.  In brief, MedPAC recommends the following updates:

• Hospital Inpatient & Outpatient Services. MedPAC recommends that Congress increase payment rates in 2009 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.  The Centers for Medicare & Medicaid Services' (CMS) current projection of the market basket increase for fiscal year 2009 is 3.0 percent.  MedPAC also recommends that Congress reduce the indirect medical education adjustment by 1 percent to 4.5 percent per 10 percent increment in the resident-to-bed ratio. 
• Physician Services. MedPAC recommends that Congress increase the physician fee schedule conversion factor by the projected change in input prices less MedPAC's adjustment for productivity growth.  With the current estimate of input cost changes in 2009 of 2.6 percent and MedPAC's productivity adjustment of 1.5 percent, MedPAC's recommended 2009 update would be 1.1 percent.  MedPAC also recommends that Congress enact legislation requiring that CMS establish a process for measuring and reporting physician resource use on a confidential basis for a period of 2 years.
• Outpatient Dialysis Services. MedPAC recommends that Congress update the composite rate in calendar year 2009 by the projected rate of increase in the end-stage renal disease market basket index (2.5 percent) less MedPAC's adjustment for productivity growth (1.5 percent).  This would update the composite rate by 1 percent.  MedPAC also recommends that Congress implement a quality incentive program for physicians and facilities that treat dialysis patients.
  
• Skilled Nursing Facility Services. MedPAC recommends that Congress eliminate the update to payment rates for skilled nursing facility (SNF) services for fiscal year 2009 and that Congress establish a quality incentive payment policy for SNFs.  Further, to improve quality measurement for SNFs, MedPAC recommends that CMS:
  • add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures;
  • revise the pain, pressure ulcer, and delirium measures currently reported on CMS' Nursing Home Compare website; and
  • require SNFs to conduct patient assessments at admission and discharge.
• Home Health Services. MedPAC recommends that Congress eliminate the update to payment rates for home health care services for calendar year 2009. 
• Inpatient Rehabilitation Facility Services. MedPAC recommends that the update to the payment rates for inpatient rehabilitation facility services be eliminated for fiscal year 2009.
• Long-Term Care Hospital Services.  MedPAC recommends that the payment rates for long-term care hospital (LTCH) services be updated by the market basket index less MedPAC's adjustment for productivity growth (1.5 percent).  MedPAC reports that, under current market basket assumptions, this recommendation would update LTCH payment rates by 1.6 percent.

MedPAC is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise Congress on issues affecting the Medicare program.  MedPAC meets publicly to discuss policy issues and formulate its recommendations to Congress.  Two reports, issued in March and June each year, are the primary outlets for MedPAC's recommendations.