December 21, 2001
MedPAC Reviews Payment Adequacy Framework, Reconsiders GME Carve-Out from Medicare+Choice Rates
The Medicare Payment Advisory Commission (MedPAC) met Dec. 13-14. The commissioners considered the application of their payment adequacy framework to preliminary discussions concerning Medicare payment updates to providers. In addition, they reconsidered the direct graduate medical education (DGME) and indirect medical education (IME) carve-out from Medicare+Choice rates, differences in resident education costs, and options for controlling physician spending without the sustainable growth rate (SGR).
MedPAC's payment adequacy framework begins by estimating current Medicare payments and costs. Then it assesses the "appropriateness" of current payments and costs by examining a number of different factors including margins, bond ratings, and access indicators. The Commission's discussions of their Medicare payment update recommendations may take into account whether they believe current Medicare payment levels are appropriate. MedPAC staff applied their framework to home health agencies, skilled nursing facilities, physician payment, ESRD facilities, and inpatient and outpatient hospital payments. The Commission will consider payment update recommendations at its January meeting.
Commissioners also discussed whether to continue the "carve-out" of DGME and IME payments from Medicare+Choice rates. During their presentation, MedPAC staff stated the current policy could be viewed as inconsistent with the Commission's previous recommendation that both IME and DGME payments are for patient care and thus should be included in the Medicare+Choice payments. MedPAC staff presented two recommendations that would eliminate the current "carve-out." While there was no enthusiasm to change the current system, an official decision will be made at the January meeting.
MedPAC also reviewed the Balanced Budget Refinement Act (BBRA) provision that adjusts a national average DGME per resident amount to account for local wage differences using the physician geographic adjustment factor (GAF). This review was in response to a congressional mandate. Specifically, the Commission considered whether the provision should continue to use the physician GAF or use another geographic index, such as the Medicare hospital wage index, to account for local wage differences. MedPAC will continue this review at its January meeting.
The Commission also considered its draft chapter on controlling spending on physician services without the SGR system. The presentation explained why the goals of the system, accounting for changes in costs and controlling spending, are incompatible. However, the presentation discussed two alternative strategies to achieve these goals, coding edits and reducing the overuse and misuse of services. MedPAC will consider the adequacy of physician payments during its January meeting.
Other topics addressed at the meeting included:
- Quality improvement for health plans and providers;
- Competitive bidding in Medicare+Choice;
- An overview of how Medicare pays for services;
- Measuring changes in input prices in traditional Medicare; and
- Paying for new technologies in hospital outpatient departments.
Information: Karen Fisher, 202-862-6140, or Denise Dodero, 202-828-0493, AAMC Division of Health Care Affairs.
