MedPAC recommends overhaul to Medicare's hospital quality programs 

Calculator that says "Medicare" on it on top of money, next to bottle of pills
MedPAC is recommending an overhaul to Medicare's quality programs for hospitals. (Getty Images/liveslow)

The Medicare Payment Advisory Commission on Thursday voted to approve a recommendation that Congress and the Centers for Medicare & Medicaid Services overhaul quality and value programs for hospitals. 

MedPAC first outlined the idea in its June report (PDF) to Congress, saying it would essentially lump together several existing programs that measure quality—the Hospital Readmissions Reduction Program, the Hospital Value-Based Purchasing Program and the Hospital-Acquired Condition Reduction Program—into the Hospital Value Incentive Program (HVIP). 

It would also eliminate the existing Inpatient Quality Reporting Program.


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The goal? To better reward hospitals with strong quality performance while maintaining financial pressure on hospitals to reduce healthcare costs. 

Performance across five domains—readmissions, mortality, spending, patient experience and hospital-acquired conditions—would be converted to HVIP “points.” Those points would be used to distribute the pool of funds instead of penalizing hospitals as the current system does. 

MedPAC’s analysis estimates hospitals could see a 3.3% net increase in Medicare payments through the consolidation of these programs, compared to a 2.8% increase under current law. 

RELATED: MedPAC sings ‘chorus of compliments’ for revamped hospital quality measures 

Though the recommendations were passed unanimously, some commissioners did raise concern about the timeline of the rollout should Congress and CMS choose to move forward. MedPAC’s recommendations suggest that HVIP could take effect as early as 2020. 

Congress and CMS would have to “act fast” under that timeline, however, to inform hospitals of the changes and iron out implementation kinks, said Ledia Tabor, one of the commission’s policy analysts who presented HVIP at Thursday’s meeting. 

In addition to offering a tight window for legislative action or rule-making, the commissioners noted that kicking off the program in 2020 would mean that payments under the quality incentive program would be based on data from the defunct previous models. 

Jeff Stensland, Ph.D., a principal policy analyst for the commission, acknowledged that there would be a lag time while the data caught up to the rest of the program. However, Stensland emphasized that, as hospitals’ Medicare margins decrease, the potential increase in payment and incentive to improve quality is broadly beneficial. 

“They should be moving upward,” he said. 

RELATED: Lawmakers ask MedPAC to investigate how hospital consolidation impacts Medicare and vice versa 

MedPAC also unanimously approved a set of recommendations aimed at payment for physicians and other advanced practice providers. It suggests that Congress and CMS eliminate “incident to” billing as an option for nurse practitioners and physician assistants, as it prevents data-gathering on who is actually providing care for Medicare’s members. 

That billing model, in which care provided by NPs or PAs is billed under a physician’s identifier, also pays 100% of the physician fee schedule rates, while services billing under an NP or PA's identifier are billed at 85% of the fee schedule rate, so eliminating “incident to” billing also represents a cost saving. 

The commission also recommended CMS take another look at how it designates advanced practice providers in specialty practices. 

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