WASHINGTON – The Medicare Payment Advisory Commission recently urged Congress and the Centers for Medicare & Medicaid Services to adopt and refine various methodologies for determining provider reimbursements and achieving healthcare value.
Mark E. Miller, executive director of MedPAC, urged Congress to consider sponsoring research in “comparative effectiveness” – a basis of comparing quality outcomes to determine healthcare value – in testimony on June 12 before the subcommittee on Health of the House Committee on Ways and Means.
“Increasing the value of healthcare spending requires knowledge about the outcomes of services,” he said. Comparing outcomes of different treatments for the same condition could “help all public and private payers to get greater value from their resources.”
Information on comparative effectiveness is lacking, Miller said. Because gathering such data would benefit all healthcare stakeholders, the federal government should play a role in producing the information and making it publicly available.
Miller recommended that Congress give the task to an independent entity and sponsor research on comparative effectiveness.
In a June 11 letter to CMS Acting Administrator Leslie V. Norwalk, members of MedPAC noted that CMS has been actively considering three of the four changes to the inpatient prospective payment system proposed by the commission in March 2005. One change CMS has not considered – the adoption of Medicare Severity Diagnostic-Related Groups (MS-DRG) as a part of the prospective payment system – would require new legislation, the letter said.
MedPAC included a list of suggestions for making a transition to MS-DRGs. Along with the adoption of the severity-based payments, CMS should refine the methods for estimating cost-based weights for MS-DRGs. Proposed refinements include using cost-to-charge ratios for drugs, supplies, radiology, ER and blood products to create more revenue centers for hospitals and standardizing charges and costs used to develop cost-to-charge ratios to account for local wages and providers’ low-income patient loads.
The commission also recommended that CMS adopt a two-year transition period for MS-DRGs, adopt cost-based, hospital-specific relative value weights and make a sustained effort to improve the quality and specificity of hospitals’ reporting of cost information.
In a separate letter to Norwalk also dated June 11, MedPAC Chairman Glen Hackbarth said CMS should update the inpatient rehabilitation facilities’ prospective payment system in advance of next year’s deadline for the “75 percent rule.” That rule requires that designated inpatient rehab facilities, which typically receive higher Medicare reimbursements under the methodology, have a patient population of which 75 percent requires treatment for one of 13 specific conditions.
According to MedPAC, the 75 percent rule is a “blunt instrument” intended to ensure that only patients with a certain severity level are admitted to inpatient rehab facilities. The commission urged CMS to consider more patient-specific criteria and use case-mix group weights and length of stay in determining IRF reimbursements.
“We believe that in visibly and proactively taking such steps, Medicare will demonstrate a commitment to ensuring that policies governing IRF payments are based on appropriate clinical indicators,” Hackbarth said.