MedPAC Releases 2018 Report

March 2018 ~

The Medicare Payment Advisory Commission (MedPAC) has released its March 2018 Report to Congress on Medicare payment policy, detailing its payment update recommendations to Congress, which the Commissioners voted on in January.

The 2018 report includes the commission’s analyses of payment adequacy in fee-for-service Medicare and reviews the status of Medicare Advantage and the prescription drug benefit (Part D), a chapter on Medicare telehealth services, as well as recommendations for changes to the physician quality payment program (QPP), reinforcing its earlier recommendation to eliminate the Merit-based Incentive Payment System (MIPS).

Below are the  recommendations for the 2019 payment year, as seen in MedPAC’s March 2018 Report to Congress.


For 2019, the Congress should:

Hospitals: Inpatient and Outpatient Services

  • Update the 2018 Medicare base payment rates (inpatient and outpatient) for acute care hospitals by the amount determined under current law.

Physicians and Other Health Professionals

  • Increase the calendar year 2018 payment rates for physician and other health professional services by the amount specified in current law.

Ambulatory Surgical Centers

  • Eliminate the calendar year 2019 update to the Medicare payment rates for ambulatory surgical centers.
  • The Secretary should require ambulatory surgical centers to report cost data.

Outpatient Dialysis

  • Update the calendar year 2018 Medicare end-stage renal disease prospective payment system base rate by the amount determined under current law.

Post-Acute Care: Increasing the Equity of Medicare’s Payments within Each Setting

  • Direct the Secretary to begin to base Medicare payments to post-acute care (PAC) providers on a blend of each sector’s setting-specific relative weights and the unified PAC prospective payment system’s relative weights in fiscal year 2019.

Skilled Nursing Facilities

  • Eliminate the market basket update for skilled nursing facilities for fiscal year 2019 and 2020;
  • Direct the Secretary to implement a redesigned prospective payment system (PPS) in fiscal year 2019 for skilled nursing facilities; and
  • Direct the Secretary to report to the Congress on the impacts of the revised PPS and make any additional adjustments to payments needed to more closely align payments with costs in fiscal year 2021.

Home Health Agencies

  • Reduce Medicare payments to home health agencies by 5% in calendar year (CY) 2019 and implement a two-year rebasing of the payment system beginning in CY 2020.
  • Direct the Secretary to revise the prospective payment system to eliminate the use of therapy visits as a factor in payment determinations, concurrent with rebasing.

Inpatient Rehabilitation Facilities

  • Reduce the fiscal year 2019 Medicare payment rate for inpatient rehabilitation facilities by 5%.
  • Additionally, the Commission reiterates its March 2016 recommendations on the inpatient rehabilitation facility prospective payment system.

Long-Term Care Hospitals

  • Eliminate the fiscal year 2019 Medicare payment update for long-term care hospitals.


  • Eliminate the fiscal year 2019 update to the Medicare payment rates for hospice services.


For Medicare Advantage contract consolidations involving different geographic areas, MedPAC suggests the Secretary should:

  • For any consolidations effective on or after January 1, 2018, require companies to report quality measures using the geographic reporting units and definitions as they existed prior to consolidation, and
  • Determine star ratings as though the consolidations had not occurred, and maintain the pre-consolidation reporting units until new geographic reporting units are implemented.

The Secretary should:

  • Establish geographic areas for Medicare Advantage quality reporting that accurately reflect health care market areas, and
  • Calculate star ratings for each contract at the geographic level for public reporting and for the determination of quality bonuses.


The Commision recommends that Part D’s coverage-gap discount program should be changed to:

  • Require manufacturers of biosimilar products to pay the coverage-gap discount by including biosimilars in the definition of “applicable drugs” and
  • Exclude biosimilar manufacturers’ discounts in the coverage gap from enrollees’ true out-of-pocket spending.


Based on the Commission’s analysis that MIPS is overly burdensome on clinicians and will not succeed in helping Medicare beneficiaries choose clinicians, clinicians change practice patterns to improve value, or the Medicare program rewarding clinicians based on value, MedPAC suggests Congress should:

  • Eliminate the current Merit-based Incentive Payment System; and
  • Establish a new voluntary value program (VVP) in fee-for-service Medicare in which:

o clinicians can elect to be measured as part of a voluntary group; and

o clinicians in voluntary groups can qualify for a value payment based on their group’s performance on a set of population-based measures.


The 21st Century Cures Act of 2016 mandates that the Commission provide information about coverage of telehealth services under the Medicare FFS program, coverage of telehealth services under commercial insurance plans, and ways in which the telehealth coverage policies of commercial insurance plans might be incorporated into the Medicare FFS program.

The information is included in the March 2018 report, as well as the recommendation for policymakers to use a set of principles (cost, access, and quality) to evaluate individual telehealth services separately before adoption into Medicare coverage. MedPAC notes that because it has not seen clear examples of commercial payer practices that should be imported into FFS Medicare, the March report does not include recommendations about coverage of specific telehealth services.



Source(s): MedPAC Press Release; MedPAC Fact Sheet; MedPAC Report to Congress; Hansen Hunter & Co; AAMC; GNYHA; HealthExec; MedPage Today;