MedPAC's 6 latest spending recommendations to Congress

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Medicare's drug spending rose 26 percent from 2013-18, a trend the Medicare Payment Advisory Commission attributed to increasing drug prices rather than an increase in the number of prescriptions filled by beneficiaries.

In its 2021 healthcare delivery system report, released June 16, MedPAC makes the following recommendations to Congress:

  1. The current Medicare Advantage benchmark policy should be replaced with one that applies a rebate of at least 75 percent, a discount rate of at least 2 percent and a relatively equal blend of per capita local area fee-for-service spending with price-standardized per capita national fee-for-service spending. It should also use geographic markets as payment areas, use the fee-for-service population with both Part A and Part B in benchmarks, and eliminate the current pre-Affordable Care Act cap on benchmarks.

  2. CMS should implement a more harmonized portfolio of fewer alternative payment models, designed to work together to reduce spending and improve quality.

  3. Medicare’s current skilled nursing facility value-based purchasing program should be replaced with a value incentive program that scores a small set of performance measures, incorporates strategies to ensure reliable measure results, establishes a system to distribute rewards that minimize cliff effects, accounts for differences in patient social risk factors using a peer-grouping mechanism, and completely distributes a provider-funded pool of money. CMS should also begin to report patient experience measures for skilled nursing facilities.

  4. Congress should require CMS to transition to empirically justified indirect medical education adjustments to both inpatient and outpatient Medicare payments.

  5. Congress should cover all appropriate preventive vaccines and their administration under Part B instead of Part D without beneficiary cost sharing, as well as modify Medicare’s payment rate for Part B-covered preventive vaccines to be 103 percent of wholesale acquisition cost. Congress should also  require vaccine makers to report average sales price data to CMS for analysis.

  6. Congress should direct CMS to modify the pass-through drug policy in the hospital outpatient prospective payment system so that it includes only treatments that function as supplies to a service and applies only to treatments that are clinically superior to their packaged analogs. CMS should also specify that the separately payable non-pass-through policy in the hospital outpatient prospective payment system applies only to treatments that are the reason for a visit and meet a defined cost threshold.

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