MedPAC Prepares June Report
March 28, 2003 - At its March 20-21 meeting, the Medicare
Payment Advisory Commission (MedPAC) discussed issues to be
incorporated into its June 2003 Report to Congress. The issues
included, among others, the payment method for outpatient
drugs, the growth in the volume of physician services, and
using quality incentives in the Medicare program.
The MedPAC staff presentation on the payment method for outpatient
drugs noted that the annual growth rate for outpatient drugs
has been more than 20 percent for the past three years. There
are several problems with the current system, including:
- Payments based on the average wholesale price (AWP) overstate
provider acquisition costs;
- The payment system can lead to higher prices; and
- High drug prices may be used to subsidize payments for
drug administration.
MedPAC staff noted that the only way to capture the other
expenses associated with administrating outpatient drugs is
through a complete revision of the practice expense relative
value units (RVUs), which would affect other specialties.
The Commissioners' discussion focused on how to implement
a new payment methodology. Additional information and a formal
recommendation will be presented at the Commission's April
meeting.
Commissioners also heard a presentation on the growth in
the volume of physician services. The MedPAC staff presentation
focused on whether "defensive medicine" in states
with high professional liability insurance premiums contributed
to the increased volume. The evidence presented was inconclusive.
Commissioners will discuss this issue further at the April
meeting. They will also review additional research and a formal
recommendation on this topic at that time.
The Commission initially examined the issue of quality incentives
in Medicare in September 2002. The MedPAC staff presentation
examined the use of quality incentives in private markets
and the potential applicability in Medicare. Commissioners
discussed whether incentives should be provider based (bonuses)
or beneficiary based (lower premiums). MedPAC staff will present
a formal recommendation based on the Commissioners discussion
at the April meeting.
Information:
Richard Chard, Senior Research Associate
AAMC Health Care Affairs
rchard@aamc.org
(202) 862-6297
Jeff Patyk, Staff Specialist
AAMC Health Care Affairs
jpatyk@aamc.org
(202) 828-0498
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