The Medicare Payment Advisory Commission has issued its June 2014 report to Congress on issues affecting the Medicare program and possible payment system refinements.
Here are seven Medicare issues the Commission addresses in the report.
1. Measuring quality of care. MedPAC is currently considering alternatives to Medicare's current quality of care measurement system. "A fundamental problem with Medicare’s current quality measurement programs, particularly in [fee-for-service] Medicare, is that they rely primarily on clinical process measures for assessing the quality of care provided by hospitals, physicians, and other types of providers, measures that may exacerbate the incentives in FFS to overuse services and fragment care," the report states.
According to the Commission, population-based outcome measures could be used to assess quality within local areas across Medicare's three payment models: FFS Medicare, Medicare Advantage and accountable care organizations. However, a population-based outcomes approach might not be ideal for adjusting FFS payments, since FFS providers haven't agreed to take on responsibility for a population of beneficiaries, according to the report.
2. Financial assistance. The Medicare Savings Program currently provides financial assistance with Part B premiums for beneficiaries who earn as much as 135 percent of the federal poverty level. Medicare Part D also offers assistance to beneficiaries earning as much as 150 percent of the federal poverty level.
MedPAC has previously recommended that Congress align the MSP criteria with the Part D low-income drug subsidy to extend the Part B subsidy to beneficiaries earning as much as 150 percent of the federal poverty level. The Commission has also recommended a redesigned FFS benefit package that would give beneficiaries better protection against high out-of-pocket spending through an OOP spending maximum and establish incentives to make better decisions about discretionary care by replacing coinsurance with copayments.
3. Improving risk adjustment. Hospitals participating in Medicare Advantage currently receive monthly capitated payments for each beneficiary. The payment is determined according to a base rate and a risk score, which reflects how costly the patient is expected to be relative to the average beneficiary on a national basis. CMS uses the CMS-hierarchical condition category — which uses beneficiaries' demographic characteristics and medical characteristics to predict the cost of their care — to risk adjust MA payments. However, Medicare costs vary considerably between beneficiaries with the same HCC classification, and underpayments for high-cost patients and overpayments for low-cost ones create an equity issue, according to the report. MedPAC is considering alternatives, such as a hybrid model blending concurrent and prospective risk adjustment.
4. Synchronizing policy across payment models. According to MedPAC, Medicare's payment rules and quality improvement incentives vary across its three main payment models — FFS, Medicare Advantage and ACO programs. The Commission is exploring how to align payment policies across the three models. The report states, "The Commission maintains that to encourage beneficiaries to choose the model that they perceive as having the highest value in terms of cost and quality, the Medicare program should pay the same on behalf of each beneficiary making the choice. The Medicare program could not subsidize one choice more than another and still be financially neutral with respect to the beneficiary’s choice to remain in the FFS system or enroll in an MA plan."
5. Paying for primary care with per-beneficiary reimbursement. MedPAC has a long-standing concern that primary care services are undervalued by the Medicare FFS reimbursement system. The average compensation for specialist practitioners can be more than twice that of primary care practitioners, ultimately deterring physicians and other health professionals from providing primary care. Furthermore, the report states the current Medicare fee schedule is oriented toward discrete service and procedures with a definite beginning and end, while primary care services "ideally are oriented toward ongoing, non-face-to-face care coordination for a panel of patients." Therefore, in its report, MedPAC considers a per beneficiary payment for primary care to address this issue.
6. Payment variation across post-acute care settings. MedPAC believes Medicare shouldn’t pay more for care in one setting than another, provided that the care can be administered safely and effectively in a lower-cost setting. Therefore, the Commission is exploring site-neutral payments to post-acute care facilities, specifically inpatient rehabilitation facilities and skilled nursing facilities. "The Commission recognizes that the services in the two settings differ; however, we question whether the program should pay for these differences when the patients admitted and the outcomes they achieve are similar," the report states. In 2011, total Medicare payments ranged from 42 percent higher in IRFs than SNFs for stroke with major complication or comorbidity to about the same for hip and femur procedures, according to the report.
7. How medication adherence affects medical spending. MedPAC has studied the effect medication adherence has on medical spending. Focusing on the use of angiotensin-converting enzyme inhibitors and angiotensin receptor blockers by Medicare patients with congestive heart failure, MedPAC found medical spending was lower for patients with high rates of medication adherence. Spending for adherent beneficiaries was, on average, as much as $5,000 lower per month, compared with nonadherent beneficiaries. However, the effects likely vary depending on beneficiary characteristics, and the estimated effects of medication adherence on spending are "highly sensitive to specifications in the estimation model," according to the report.
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