The Medicare Payment Advisory Commission (MedPAC) recently delivered its annual report to Congress on Medicare Payment Policy and provided testimony before the House Ways and Means Health subcommittee. The report includes recommendations for fiscal year 2014 payment updates and reforms to the reimbursement systems for Medicare providers including inpatient hospitals, inpatient rehabilitation facilities (IRF), and home health agencies among others.

The Commission is statutorily required to make the annual report to Congress, and its recommendations are considered as Congress legislates changes to the Medicare system, however MedPAC has no authority to make any changes to Medicare.

In regard to therapy, three subject areas are of particular interest: SNFs, IRFs, and “moving forward from the sustainable growth rate (SGR) system.”

Inpatient Rehabilitation Facilities – As with many of the other Medicare providers, MedPAC recommended no payment update for IRFs in 2014. It based this recommendation on the facts that beneficiary access to IRF care remains stable, quality of care across the industry remained relatively stable, providers retain good access to capital and that “in 2011, Medicare payments per case to IRFs grew faster than costs per case.” The report also recognized that the IRF industry – both freestanding and hospital based units – continued to maintain compliance with the 60% threshold in 2012.

Moving forward from the sustainable growth rate (SGR) system – In the Appendix to the MedPAC report, they reproduced their October 2011 letter to Congress which details the recommendation to repeal the sustainable growth rate system. The flaws in the SGR – the formulaic payment method for physicians and other health professionals including therapists – have led to the annual need for Congress to legislate a ‘doc fix’. The Commission highlights the Congressional Budget Office’s (CBO) recent reduction in the estimated cost to permanently fix the SGR as the rationale for Congress to take action now.

We expect that the June MedPAC report to Congress that addresses Medicare and the Health Care Delivery System will include the congressionally-mandated report on reforming Part B Outpatient Therapy Services.

By Kindred Hospital Rehabilitation Services