News, Skilled Nursing Facility

The transition to a unified payment system for PAC facilities could start as early as 2019, suggests MedPAC

In response to a Congressional mandate, in 2016 The Medicare Payment Advisory Commission (MedPAC) recommended design features of a unified payment system, the post-acute-care (PAC) prospective payment system (PPS), to pay for services in the four post-acute care settings (home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals). In a meeting held last Thursday, Commissioner Carol Carter discussed how the PAC PPS design could “increase the equity of payments within each post-acute-care setting.”

Among the Commission’s recommendations was integrating one element of the design into each setting’s payments before implementing the full unified payment system as a way to begin to correct the known biases of the current payment systems and redistribute and increate the equity of payments within each setting. This, says the Commission, would prevent providers from administering treatment to certain types of patients over others (such as medically complex patients).

The Commission also believes that transitioning in an incremental fashion to a unified PAC PPS will encourage providers to begin making the changes that they will want to make in order to be successful under the new payment design, and will support recommendations that would better align payments to costs without undesirable impacts.

The current payment systems are considered to have multiple shortcomings, including its incentive to furnish therapy unrelated to patient care needs and its incentive to extend lengths of stay in order to avoid short-stay payments.

According to data, the Commission found that a unified payment system would redistribute payments across conditions, increasing payments for medically complex patients and decreasing payments for rehabilitation care that’s unrelated to a patient’s characteristics. The Commission also concluded that a unified PAC PPS is feasible and can be implemented sooner than originally thought.

Carter provided a broad outline of the PAC PPS design in her presentation, which she said is consistent with the design of any prospective payment system. Under the unified system, unified PAC PPS rates would be “blended” with the current PPS rates to affect the case mix adjuster. “Payments would be more closely aligned with the costs of care, so the equity of payments within each setting would increase,” said Carter. Additionally, “Within a setting, payments to providers would be redistributed based on the mix of conditions they treat, how their costs compare to the average, and their current therapy practices,” explained Carter. As a result, payments would increase for nonprofit and hospital-based providers and decrease for for-profit and freestanding providers in each setting.

Commissioner David Grabowski, PhD, suggested that the Commission is considering a recommendation to CMS to transition to one-third of the unified PAC PPS by 2019, with two-thirds transition complete in 2020, and the full transition complete by 2021.

On December 7-8, the Commission will hold their next meeting and continue the discussion of transitioning to a unified PAC PPS, including the adequacy of payments for each PAC setting, as well as changes in policy that would increase the equity of payments within each setting.