The Medicare Payment Advisory Commission has released its June 2016 report on Medicare payment policy to Congress, in which it gives a status report on the Medicare Advantage and Part D drug programs.
Here are eight key Medicare issues from MedPAC's June report.
1. From 2007 through 2014, spending for Medicare's prescription program grew from $46 billion to $73 billion, by nearly 60 percent, MedPAC said. The commission recommended Congress re-examine the program's design "to better ensure financial sustainability."
2. The statutory and structural differences between Medicare Advantage and traditional fee-for-service payments, including elements beyond premium design, raise important issues of equity and implementation, according to MedPAC. The commission said these differences will need to be resolved to maximize the value of the Medicare program to beneficiaries and taxpayers. Furthermore, MedPAC said, Medicare should determine whether to establish payment and quality rules that reward the more efficient system of care in a market, how to encourage beneficiaries to receive care through that system, and how to provide the information beneficiaries need to make informed decisions.
3. MedPAC recommended Congress reduce Medicare Part B dispensing fees for inhalation drugs and supplying fees for oral anticancer, oral antiemetic and immunosuppressive drugs to rates similar to those paid by other payers. Medicare Part B currently pays substantially higher dispensing and supplying fees than the rates paid by Medicare Part D plans and Medicaid.
4. The Medicare Access and CHIP Reauthorization Act of 2015 repealed the sustainable growth rate system and established a new approach to updating payments to clinicians. This approach creates incentives for clinicians to participate in alternative payment models. The commission presented basic principles for these alternative payment models. Among them are that the eligible alternative payment entity should be at financial risk for total Part A and Part B spending, that CMS should give eligible alternative payment entities certain regulatory relief, and that each eligible alternative payment entity should take on financial risk and enroll clinicians.
5. MedPAC found that it is feasible to develop a common unit of payment for post-acute care services, with patient and stay characteristics forming the basis of risk adjustment. The commission concluded that because of differences in Medicare's coverage policies across the PAC settings, separate models will be needed to establish payments for nontherapy ancillary services and for the combination of routine and therapy services. The commission also concluded that a short-stay outlier policy (to prevent large overpayments) and a high-cost outlier policy (to prevent large losses by providers and protect beneficiary access to care) will be necessary components of a PAC prospective payment system.
6. MedPAC recommended giving Medicare Part D plan sponsors greater financial incentives and stronger tools to manage the benefits of high-cost enrollees. Under the commission's proposal, Medicare's overall subsidy of basic Part D benefits would remain unchanged at 74.5 percent, but plan sponsors would receive more of that subsidy through capitated payments rather than open-ended reinsurance payments.
7. Regarding Medicare Part D, the commission recommended excluding manufacturer discounts on brand-name drugs from counting as enrollees' true out-of-pocket spending, while providing greater insurance protection through a real cap on out-of-pocket spending. The commission said its recommended improvements would moderately increase financial incentives for enrollees who receive the low-income subsidy to use lower cost drugs and biologics.
8. MedPAC discussed giving isolated rural hospitals the option of converting to an outpatient-only model that it believes may be more sustainable in communities with declining inpatient volumes. The objectives of a new outpatient-only option would be to ensure access to essential services. MedPAC outlines two potential options for communities that lack the population to support efficient high-quality inpatient services: a 24/7 emergency department model and a clinic with ambulance services model.
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