American Hospital Association Slams MedPAC Post-Acute Proposal

A recommendation from the Medicare Payment Advisory Commission (MedPAC) to overhaul the payment system for post-acute care has drawn criticism from the world’s largest hospital association.

Last June, MedPAC recommended a new prospective payment system (PPS) prototype that would move away from the current fee-for-service (FFS) system. Adopting a unified PPS and redistributing payments across post-acute care (PAC) providers would put an end to issues in the current system, such as incentives to favor certain types of care for certain patients, according to MedPAC.

But the American Hospital Association (AHA), which represents the interests of roughly 5,000 hospitals, inpatient rehabilitation facilities, skilled-nursing facilities, and hospital-based home health agencies, doesn’t see it that way.


The association criticized MedPAC’s proposal as unrealistic in a Sept. 13 letter to Centers for Medicaid and Medicare Services (CMS) Administrator Seema Verma.

“While we appreciate the extensive work MedPAC conducted in developing an initial PAC PPS prototype, and understand the statutory constraints on its design, we are concerned that the model contains fundamental problems that make it unworkable as a foundation for CMS and ASPE’s PAC PPS development effort,” the letter reads.

Specifically, AHA has three main concerns with the PPS prototype: that it relies too heavily on nonrepresentative data from the CMS PAC Payment Reform Demonstration (PAC PRD); that it has an overly complex design that wouldn’t be easy to implement; and that it could threaten patient access to care.


“Given the magnitude of the problems identified with the MedPAC prototype, we encourage CMS and ASPE not to rely on it as they conduct their PAC PPS development process,” the AHA letter continues. “Its limitations prevent confidence in its accuracy and reliability, and should rule out its use as a basis of a new PAC PPS payment model.”

Moving forward, AHA suggests that CMS take the following six recommendations:

  • Ensure a transparent post-acute PPS development process
  • Ensure patient access to specialized post-acute services.
  • Use the most currently available cost data instead of PAC-PRD cost data
  • Streamline the post-actue PPS to achieve payment predictability
  • Streamline the post-actute regulatory framework under a post-acute PPS
  • Anticipate the impact of alternative payment models (APMs) on a post-acute PPS

Written by Tim Regan

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