MedPAC Delves Into Medicare Spending Trends, ACOs

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In a meeting last week, the Medicare Payment Advisory Commission went over several pertinent topics related to Medicare, including the program's spending growth as well as Medicare accountable care organizations.

MedPAC staff members presented an initial context for Medicare's current payment and spending trends. In 2012, Medicare represented 3.6 percent of gross domestic product, and by 2021, it's expected to total 4 percent of GDP. Although Medicare spending has outpaced economic growth in the past, it has actually slowed over the past several years. Many healthcare experts have attributed the slowdown to the economic recession that started in 2008 as well as structural changes in the healthcare markets, like less usage of medical technology.

Despite the slowdown in Medicare spending growth, MedPAC officials expect Medicare to "consume a greater share of society's resources" over the coming years for a multitude of reasons. For example, Medicare enrollment usually increases 2 percent per year, but recent estimates put enrollment growth at 3 percent annually. By 2022, the Medicare program is expected to have 70 million beneficiaries compared with 50 million today.

"Because Medicare is such a significant share of the federal budget, the Congress will be under inexorable pressure to find Medicare savings opportunities to restrain growth in annual deficits and eventually reduce total federal debt," said John Richardson, a principal policy analyst at MedPAC.

Officials also discussed Medicare ACOs. Currently, there are about 250 Medicare ACOs serving 4 million beneficiaries. Earlier this year, CMS released results from its Pioneer ACO program, saying all 32 Pioneers improved quality and patient satisfaction — but only 13 produced shared savings with the government. In addition, nine of the original Pioneer ACOs announced they were withdrawing from the program.

MedPAC has suggested several changes to Medicare's ACO program, including reducing the set of quality measures and scoring, as well as improving benchmarks across ACOs and Medicare Advantage networks.

Last week's meeting was a follow-up from its March session, when MedPAC released its annual report to Congress. Within the report, MedPAC said hospitals should only receive marginal increases to their Medicare reimbursements in 2014 to "maintain pressure on the industry to contain costs." The transcript for MedPAC's September meeting can be found on its website.

More Articles on MedPAC:
MedPAC Urges Congress to Close Pay Gap Between Hospitals, Clinics
GAO Names New MedPAC Committee Member
MedPAC: Hospitals Must Have Pressure to Contain Costs

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