Congress Quietly Acts to Improve Medicare

Congress might not be too popular these days, but quietly a week and a half ago, they passed a small but important bill that could pave the way for Medicare delivery system reforms. Just before leaving town, the House and the Senate each passed the Improving Medicare Post-Acute Care Transformation, or IMPACT, Act of 2014 (H.R. 4994), by unanimous consent.

The National Law Review framed it appropriately:

The bill would enact data standardization across various post-acute care settings which could feed into various site-neutral and bundled payment initiatives. These initiatives could take a number of forms including independent legislation that targets the post-acute care sector, inclusion in broader payment reform efforts like the Medicare physician payment formula (SGR), and/or in efforts out of the Centers for Medicare and Medicaid Services (CMS) via demonstration authority. As we have noted in the past, post-acute care remains one of the top areas where health policy experts anticipate promising Congressional action this and next year. For example, post-acute care has been a priority for Senate Finance Committee Chairman Ron Wyden and is an area ripe for significant delivery and payment reforms.

The bill itself has little impact on the budget, increasing spending by $222 million to satisfy the new data requirements, offset by penalties for Skilled Nursing Facilities (SNFs) that don't satisfy the reporting requirements and reductions in caps on payments to beneficiaries in hospice care. The bill overall would save money but rather than use the net savings to reduce the debt, it adds $195 million to the "Medicare Improvement Fund," which hasn't actually funded Medicare improvements but serves as a sort of piggy bank to pay for doc fixes and other health policies.

The patient assessment data requirement in the bill is also a recommendation MedPAC made in its March 2014 report to Congress. It said about the recommendation:

CMS needs to continue to improve the accuracy of program payments for PAC. At the same time, CMS needs to ensure comparability of payments across settings when providers treat similar patients. A common set of patient assessment information would also beneficiaries and providers in making decisions about whether PAC is needed and, if so, the setting and provider best able to meet a beneficiary's care needs.

Indeed, the importance of the bill is in paving the way for policymakers to reform post-acute care payments to better align them with costs. The President's budget, for example, gets a sizeable amount of its health care savings from post-acute care providers. These include $98 billion from reducing annual payment increases for Inpatient Rehabilitation Facilities (IRFs), Long-Term Care Hospitals (LTCHs), Home Health Agencies, and SNFs; $9 billion from bundling payments for post-acute care starting in 2019 (targeting a payment reduction of 2.85 percent by 2021); $2 billion from penalizing SNFs for preventable re-admissions; and $2 billion from equalizing payments between IRFs and SNFs. In addition, the Medicare Payment Advisory Commission (MedPAC) recommended in their March report that policymakers freeze payments next year for a number of post-acute care providers and reduce SNF payments by 4 percent.

The passage of this law matches up with some of the discussions that took place last week at a Medicare policy conference held jointly by the Campaign to Fix the Debt, the Dartmouth-Hitchcock health care system, and Dartmouth College. The conference, titled The Dartmouth Summit: Medicare Reform Strategies to Create a Sustainable Health System, brought together some of the nation's top health policy experts, health system leaders, and policymakers to discuss policy changes that could help accelerate the transition away from the fee-for-service (FFS) payment system in Medicare. In addition to presentations from a number of speakers, participants also broke out into working groups to discuss numerous recommendations to reform the health care system. Certainly, the IMPACT Act would help to inform that debate.

On paper, the bill does not have a huge direct fiscal impact. But the $222 million that the bill spends to better inform policymakers about areas where payment accuracy could be improved could have a payoff much larger if they use the data wisely.