MedPAC Releases June Report to Congress

July 1, 2019

The Medicare Payment Advisory Commission’s (MedPAC) June 2019 report to Congress details various Medicare payment issues that it has reviewed over the past year, some of which are detailed in previous GNYHA News articles.

Options for slowing the growth of Medicare fee-for-service spending for emergency department (ED) services

MedPAC is concerned about recent growth in emergency department (ED) spending, which it partly attributed to changes in provider coding practices that fueled an increase in the share of ED visits coded at higher levels. MedPAC recommends establishing national coding guidelines for ED services by 2022 to ensure accurate payments.

MedPAC also argued that hospital EDs are a common setting for nonurgent care, estimating that 2% of Medicare physician ED claims could be appropriately treated in an urgent care or other lower-cost non-ED setting. To encourage providers to shift nonurgent cases from the ED to other settings, MedPAC suggests strategies including patient education, expanding measurement of avoidable ED use, and encouraging EDs to improve care coordination with primary care physicians.

MedPAC previously made other recommendations about the growth of ED services. In its March 2017 report, MedPAC expressed concern that the number of standalone EDs was growing, yet the Centers for Medicare & Medicaid Services (CMS) had no way to track the volume. It recommended adding a claims modifier for services provided at off-campus standalone EDs to allow CMS to track service volume. In fiscal year 2019, CMS heeded this recommendation by requiring providers to use a new “ER” modifier for services furnished at off-campus EDs.

Evaluation of the Medicare Shared Savings Program (MSSP) showed reduced spending

MedPAC’s analysis found that growth in Medicare spending for Medicare Shared Savings Program (MSSP) beneficiaries was 1-2 percentage points lower over four years than it would have been without MSSP. Accountable care organizations (ACOs) that include both physicians and hospitals had fewer savings than physician-only ACOs. MedPAC also warned that recent program changes give all MSSP ACOs the option of retrospective beneficiary assignment, which could result in patient selection issues and put ACOs at risk if patients with newly acquired expensive illnesses are switched into the ACO. To mitigate patient selection issues, MedPAC suggests requiring prospective beneficiary assignment.

Payment strategies to improve price competition and value for Part B drugs

MedPAC offered two options to combat rising Medicare Part B drug spending: internal reference pricing and binding arbitration. Internal reference pricing promotes price competition by establishing a reference payment amount for groups of drugs with similar health effects that are assigned to separate billing codes, encouraging providers and patients to choose the lowest-cost alternative. If a doctor or patient chooses a therapy priced higher than the reference price, then the patient would be responsible for paying the difference.

Binding arbitration would allow the Department of Health and Human Services (HHS) Secretary to negotiate prices with drug manufacturers for high-cost drugs with limited competition, and a neutral third-party would make the final decision. Medicare payment would be based on the arbitration price, by either reducing the Medicare rate and requiring that the manufacturer honor that price or by instituting a manufacturer rebate. MedPAC previously recommended using binding arbitration in its Drug Value Program.

Payment issues in post-acute care (PAC)

MedPAC discussed several design issues for the unified PAC prospective payment system (PPS) that it recommended to Congress. First, MedPAC suggested a stay-based design rather than an episode-based design, but noted that an episode-based design could be considered once providers have adapted to the PAC PPS. MedPAC also discussed possible strategies to improve the reporting of patient assessment data and suggested a two-tiered regulatory approach to align requirements across the PAC settings. All PAC providers would face the same set of requirements to treat most PAC patients; providers treating patients with specialized needs would need to meet additional requirements that would vary by the type of care needed.

Access to primary care

MedPAC expressed concern about maintaining an adequate supply of primary care providers for Medicare beneficiaries, suggesting a scholarship or loan repayment program for physicians who pursue geriatric medicine to reduce the debt burden often accrued by medical students who choose this specialty.

MedPAC also noted that while the number of Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs) has grown in recent years, it is unable to determine how large a role these providers play, partly because APRNs and PAs bill under the National Provider Identifier of the supervising physician (i.e., “incident to” billing). To improve transparency, MedPAC recommends that Congress require APRNs and PAs to bill Medicare directly. MedPAC also recommends that the HHS Secretary refine Medicare’s specialty designations for APRNs and Pas, to gain a better understanding of the specialties that these providers practice.

MedPAC’s report also discussed its efforts in other areas, including clinician payments in Medicare and the Medicare Advantage quality bonus program.