Monday, November 10, 2014

MedPAC Update on Site-Neutral

Mike Cheek and Elise Smith

On Friday, November 7th the Commission again addressed site-neutral payment, building upon its June report discussion on orthopedic conditions. The Commissioners reach consensus upon the following action items for staff:

· Move forward with formulation of a site neutral policy which includes certain orthopedic conditions as well as a new 17 conditions discussed, today;
· Set aside the possible inclusion of stroke cases; and
· Flesh out an IRF regulatory relief package and transition plan for site neutral implementation. 

Chairperson Hackbarth expressed a need for the Commission to expeditiously move towards formulation of a site neutral policy recommendation. However, it appears the Commission will hold another site-neutral session before any recommendations are published due to the many questions posed by the Commissioners. Below are key statements from both the June meeting and related report as well as today’s meeting.  

A. MedPAC June Report

 The Commission examined three specific conditions (stroke, major joint replacement, and hip fractures) and concluded the following:

· For select conditions, characteristics of beneficiaries admitted to IRFs and SNFs in the same market were similar; 

· In addition, the prevalence of comorbidities of beneficiaries were similar but patients treated in SNFs were more likely to have several of the comorbidities; and

· Outcomes between IRFs and SNFs were basically the same for the identified conditions: there were no significant differences in risk-adjusted readmission rates between IRFs and SNFs; no significant differences in mobility, and, with respect to self-care there were no significant differences for orthopedic conditions but some higher rates of improvement for IRF patients. 

The Commission concluded that the work on orthopedic conditions were a strong starting point for a site-neutral policy and that MedPAC staff will continue to explore site-neural payment between SNFs and IRFs. 

B. MedPAC November 7, 2014 Meeting

Commission staff reviewed their criteria for to evaluate conditions for site neutral payment: a) frequently treated in lower-cost setting; b) similar risk profiles; and c) similar outcomes. In addition to reviewing June findings, at the request of Commissioners, MedPAC staff followed up on stroke cases and analyzed an additional 17 new conditions for an expanded site neutral policy. The public did not receive a list of the new conditions but, from the discussion cardiac and certain infections appear to be included. 

Staff asked the Commissioners for guidance on the design of a site-neutral policy, both regarding the 17 new conditions and stroke.

The staff noted a site-neutral stroke policy could include a subset of stroke patients who are the: 

· Most severely ill (who generally cannot tolerate intensive therapy) and 
· Least severely ill (who do not need the intensity of an IRF)

However, the Commissioners were spilt on this issue due to the heterogeneity of the population and recovery trajectory. Chairperson Hackbarth concluded a recommendation site–neutral regarding strokes could not go forward.

The Commissioners then discussed the 17 new conditions. Staff noted that the new 17 conditions comprise 20% of the conditions included in the analysis (see table below). In keeping with the Commission’s site neutral analytic criteria, the majority of these cases were treated in SNFs. While a list of these conditions was not provided, a mix of orthopedic, pulmonary, cardiac and infections appear to be included based upon discussion. The conditions comprise 10% of IRF cases and spending. Total IRF payments (including add-on payments) are 64% higher than SNF rates. IRF base rates are 49% higher than SNF rates.

The Commission was in favor of moving forward with development of a site neutral policy which includes both orthopedic conditions as well as the 17 new conditions. A site neutral policy which includes the 17 additional conditions and the orthopedic conditions approved in June (June Report) produces notable savings and is presented in the table, below. 

Effect of IRF Site-Neutral Policy on Medicare Spending
(Assumes No Behavioral Change and Does Not Include Re-Admission Costs)
For 17 new conditions
($309 million)
For orthopedic conditions (June Report)
($188 million)
($497 million)
Impact on total IRF spending

If strokes were included, which appears unlikely, an additional $256 million in savings would be accrued. 

C. AHCA Staff Comment
An underlying issue that we think the MedPAC staff will have to address is a pervasive confusion about therapy intensity and medical intensity. Commissioners repeatedly queried why SNFs treating patients with more co-morbidities and complex medical conditions (and more medical needs) when IRFs must comply with hospital requirements and have physician and nurses on staff 24/7. Such questions were posed in several ways but never answered.   

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