The Medicare Payment Advisory Commission’s (MedPAC) recently released its annual recommendations on Medicare policy. In addition to changes to Medicare Advantage (MA) diagnosis coding, the MedPAC report includes several recommendations on the Medicare fee-for-service (FFS) payment systems. Here are the highlights of MedPAC’s recommendations for 2017:
- Freeze payments for skilled nursing facilities (SNF) and home health agencies: MedPAC recommends freezing payment rates for SNFs and home health agencies for two years, while the Centers for Medicare & Medicaid Services (CMS) revises the payment system. MedPAC also recommends against 2017 payment updates for four providers – ambulatory surgical centers, long-term care hospitals, inpatient rehabilitation facilities and hospice.
- Increase inpatient and outpatient hospital payments: The Commission recommends increasing the hospital payment for inpatient and outpatient services by the amount specified in current law (projected as a 1.75% increase).
- Reduce reimbursement for Part B drug payments for safety-net hospitals by 10 percent: Safety-net hospitals (SNFs) serve low-income, medically, and socially vulnerable patients regardless of their ability to pay. MedPAC recommends slashing reimbursement for 340B drugs by 10 percent as SNFs get substantial discounts from drug manufacturers through the 340B Drug Pricing Program, while Medicare pays approximately 106 percent of each drug’s average sales price.
- Review coding practice for inpatient rehabilitation facilities (IRFs): An evaluation of IRF medical billing practices revealed that faulty coding practices may contribute to inaccurate reimbursement. So MedPac recommends that the Secretary of Health and Human Services conducts focused medical record reviews of IRFs to determine if their medical coding practices meet patient needs.
- Evaluate MA risk scores: With regard to MA plans, MedPAC recommends elimination of the cap on benchmark amounts and the doubling of the quality increases in specified counties. CMS should also make changes to the way
diagnosis codes are collected to target plans with “intensive coding practices” and ensure more accurate risk scores.
- Pay attention to Part D growth: The Medicare Part D prescription drug plan pays for prescription drug costs. Five Part D drugs had increases in cost per unit of more than 100 percent from 2013 to 2014, according to the CMS data. The Commission highlighted these payment increases within the program and the distinct shift toward generic drugs. MedPAC noted that many beneficiaries have entered the catastrophic coverage phase of Part D plans and the high cost of specialty drugs will place additional pressure on the plan in the future.
When and if these proposed reimbursement policy changes come into effect, Medicare and private payers contracting with Medicare will update their code-editing technology to better align to existing payment guidelines. They will review the claims they receive to ensure compliance with standard code edits, rules, and industry standards, and ensure that correct medical billing and coding practices have been followed. For hospitals and physician practices, the support of an experienced medical coding company would prove invaluable to ensure optimal reimbursement.
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