MedPAC issues March report to Congress: 8 Medicare issues

The Medicare Payment Advisory Commission has released its March 2016 report on Medicare payment policy to Congress, in which it makes fee-for-service payment rate recommendations and gives a status report on the Medicare Advantage and Part D drug programs.

Here are eight key Medicare issues from MedPAC's March report.

1. MedPAC recommended Congress direct HHS to increase acute care hospital inpatient and outpatient payments in 2017 by the amount specified in current law, 1.75 percent.

2. MedPAC recommended a 0.5 percent payment rate increase for physician and other health professional services, an update called for in the Medicare Access and CHIP Reauthorization Act of 2015. MACRA, which repealed the sustainable growth rate formula, provides for a 0.5 percent increase in Medicare physician fee schedule rates through 2019.

3. The commission believes ambulatory surgery center payment rates should not be increased for 2017, and the base payment rate should be the same as in 2016. MedPAC also called for Congress to require ASCs to submit cost data.

4. The commission recommended Congress direct HHS to reduce the price Medicare pays for separately payable 340B drugs by 10 percent of the average sales price. The $300 million saved by reducing the rates would be redirected into the Medicare-funded uncompensated care pool.

5. Regarding Medicare Advantage, MedPAC recommended the cap on benchmark amounts in certain counties be eliminated.

6. A Medicare Advantage plan's payment is set by comparing its cost when bidding to serve a specific region with the benchmark, or the maximum amount Medicare will pay a plan. Certain counties are subject to caps, which constrain annual growth for benchmarks and penalize plans that exceed the cap. MedPAC said the caps "create inequity among MA plans."

7. The commission also recommended Congress eliminate the doubling of the quality increases for Medicare Advantage plans in specified counties.

8. Since 2012, Medicare Advantage plan payments have been tied to star ratings, which allow plans to obtain quality incentive payments. Contracts in counties with certain demographic factors are eligible for double quality bonuses, giving plans in those counties bonuses twice that of plans with identical quality performance that are in non-double-bonus counties. To qualify for double bonuses, counties must be part of a metropolitan statistical area that has total population above 250,000 and have Medicare Advantage penetration of 25 percent. Average spending on behalf of fee-for-service beneficiaries in that jurisdiction must also be less than the national average for fee-for-service spending. Like the benchmark caps, double bonuses are a source of inequity among Medicare Advantage plans, according to MedPAC.

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