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AAMC 2014: The Medicare Maze: When Payment Policy Meets Health System Reform and Other Tales from Washington


Medicare is a complicated tangle of ever-evolving regulations, and a major source of funding for hospitals. Tracking the shifting policy landscape is a corps of government relations experts at the Association of Academic Medical Centers who explained Sunday what coming changes potentially mean for the country’s teaching hospitals. 

Ivy Baer , Senior Director and Regulatory Counsel at AAMC 

  • The Affordable Care Act today is not what it was on March 23, 2010. The Medicaid expansion is optional; 24 states have yet to stretch the health safety net to cover poor and uninsured adults. The New York Times estimates that about 3 million people are uninsured who otherwise wouldn’t be.
  • Serious legal challenges to the health law persist, including a challenge to the legality of insurance subsidies provided on the federal exchange, which the high court has agreed to hear.
  • Medicare cuts: If every single cut to hospitals occurs, hospitals stand to lose 20 percent of their Medicare revenue.
  • And then there’s the physician side. By 2017, doctors will have up to 9 percent of their Medicare payments at risk––maybe more, because there’s no cap on the value-based modifier. 

Lori Mihalich-Levin, Director, Hospital and GME Payment Policy

  • We do not expect an increase in Medicare funding for residencies any time soon.
  • A shift toward alternative payment models raises new questions for how we’re going to fund graduate medical education.
  • The packaging and bundling of payments is a challenge, because CMS isn’t always taking into account the acuity of patients. 

Mary Wheatley, Director, Physician Payment and Quality AAMC 

  • The year 2015 means big changes in how Medicare reimburses hospitals. Three performance programs—value-based purchasing, penalties for readmissions and penalties for hospital-acquired conditions––take effect this year, putting 5.5 percent of hospitals’ Medicare funding at risk.
  • Everyone is affected, but COTH [teaching] hospitals are disproportionately affected.
  • Cumulative impact is substantial. The top decile of best-performing hospitals are the only ones that will make money. The rest will absorb a $3.5 million funding hit.
  • What can academic centers do? Understand your performance, identify real performance issues versus data issues––such as reviewing claims coding to understand the impact on quality performance––and if performance is driven by something else, then share the story with us. In lobbying, detailed examples are very effective.
  • On the horizon: Hospital Compare will be going to a five-star rating system., there will be continued discussion of socio-demographic adjustment of funding; and increased weighting on patient safety, efficiency and other outcomes measures.

By: Kirsten Stewart

Kirsten Stewart is a senior writer for University of Utah Health Sciences