A congressional Medicare adviser is developing a value incentive program for post-acute care facilities that could include withholding 5% of payments for facilities that do not meet the program's standards.
Policy analysts for the Medicare Payment Advisory Commission, or MedPAC, said during a Sept. 6 meeting that a value incentive program for post-acute care facilities will help improve quality of care. The new program will use patient outcomes during hospitalizations, successful discharges and Medicare spending per beneficiary as key metrics, according to the analysts' proposals.
MedPAC advises Congress about potential payment rate and policy changes for Medicare, the federally run health insurance program for people who are 65 and older, who have certain disabilities or who have end-stage renal disease. The commission delivers a March and June report to Congress with its recommendations; it does not have legislative authority.
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There are four types of post-acute care facilities: skilled nursing facilities, home health agencies, long-term care hospitals and inpatient rehabilitation facilities.
The facilities service similar patient populations, and the new value incentive program plans to uniformly cover each facility type, according to MedPAC.
Carol Carter, a principal policy analyst for MedPAC, said during the presentation that current value-based payment programs for skilled nursing facilities and home health agencies do not meet MedPAC's principles. Carter said neither program has a small population outcome that measures patient experience or quality of care, and home health agencies do not have set standards, resulting in agencies not knowing the targets to reach.
Long-term care hospitals and inpatient rehabilitation facilities do not have value-based payment programs, according to MedPAC.
In order to increase the quality of care in these facilities, commissioners discussed withholding a percentage of Medicare payments for facilities that do not meet the criteria. The withheld amount will then be used to fund incentive payments for facilities that meet or exceed standards.
Skilled nursing facilities have a withhold and incentive percentage of 2% under a current value-based payment program. However, this is not high enough to incentivize providers to make meaningful changes, according to Carter.
Ledia Tabor, a senior analyst for MedPAC, said home health agencies are incrementally moving from a 3% incentive to an 8% incentive under their current program. Tabor said agencies are taking the incentive more seriously as it increases.
While MedPAC proposed withholding 5% of payments for facilities that do not meet the program's criteria, multiple commissioners said they would support an even steeper penalty.
Brian DeBusk, MedPAC commissioner and president and CEO of DeRoyal Industries Inc., a Powell, Tenn.-based medical equipment manufacturer, said he would support increasing the amount being withheld to 6% or 8%.
To accurately compare facilities' performances, the proposed value incentive program plans to group facilities according to facility settings and the Medicare patient population size for determining rewards and penalties. These "peer groups" will be given a pool of dollars that will be distributed according to performance, according to MedPAC.
David Grabowski, MedPAC commissioner and a professor of health care policy at Harvard Medical School, supported the program but said the commission needs to include patient experience in the metrics.
Pat Wang, MedPAC commissioner and president and CEO for Healthfirst Inc., a not-for-profit health insurer in New York, stressed that the program should take into account factors like patients' socioeconomic statuses. Wang explained that looking at more granular levels of patient groupings will better reflect health outcomes.
Carter and Tabor plan to continue developing the program and will present it to the commission again in 2020.

