MedPAC Addresses Telehealth Coverage and Separately Payable Drug Policies

November 16, 2020

At its November public meeting, the Medicare Payment Advisory Commission (MedPAC) discussed permanently expanding telehealth services and potential changes to limit which drugs are separately payable in the hospital outpatient setting.

Expanding Telehealth Coverage

In response to the rapid expansion of telehealth services under waivers during the COVID-19 public health emergency, MedPAC discussed potential policy options for permanently expanding telehealth coverage. MedPAC staff presented various options addressing issues related to services and delivery methods (i.e., audio-only versus visual), originating location, and payment policy. They considered requiring Health Insurance Portability and Accountability Act compliance for telehealth technology. The Commission also discussed adopting safeguards to protect Medicare and its beneficiaries from unnecessary spending and potential fraud.

While commissioners shared various opinions on the future of telehealth services in the Medicare program, they generally supported paying less for telehealth than in-person services, maintaining access to audio-only services, requiring some level of beneficiary cost-sharing and face-to-face visits to order some services, and reforming “incident to” billing. MedPAC will revisit this topic at its January 2021 meeting.

Narrowing Criteria for Separately Payable Drugs

The Commission continued discussing separately payable drugs in the hospital outpatient prospective payment system (OPPS), building on its June 2020 report. Under the OPPS, drugs are either packaged into a service bundle (i.e., the Ambulatory Payment Classification) or paid separately. Separately payable drugs under the OPPS fall into two categories: pass-through drugs and separately payable non-pass-through (SPNPT) drugs. Pass-through drugs must be new to market and have costs that exceed certain thresholds; such drugs are eligible for pass-through status for two to three years. SPNPT drugs are established drugs that exceed a cost-per-day threshold ($130 in 2020).

MedPAC presented criteria for identifying separately payable drugs, including paying separately for drugs that are the reason for the visit and requiring ancillary drugs to show clinical superiority to be paid separately for a limited period of time. The Commission expressed concern about the rising costs of Medicare Part B drugs and believes that modifying current separately payable drug policies could strike a more appropriate balance between provider efficiency (i.e., discouraging excessive use through packaging) and incentivizing the use of certain high-cost drugs to improve patient care (i.e.,  paying separately to mitigate hospitals’ financial risk).

The Commission discussed potential policy improvements for both pass-through and SPNPT drugs. MedPAC argued that the pass-through policy should require ancillary drugs to show clinical superiority over drugs included in a bundle of applicable services and suggested applying the same methodology as the inpatient prospective payment system’s new technology add-on payment. For SPNPTs, MedPAC suggested explicitly requiring the drug to be the reason for the visit and expanding this group of drugs to include new drugs that are the reason for the visit (i.e., by moving drugs eligible for pass-through status that are the reason for a visit to the SPNPT category). MedPAC believes these changes would result in fewer separately paid drugs and more packaged drugs. The Commission will continue its work on this topic to develop recommendations for the spring of 2021.