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MedPAC Discusses Consolidation, Primary Care Physician Shortage, and MA Quality Bonus Program

November 8, 2019

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PRESS CONTACTS
Kate Ogden, MPH, Policy & Regulatory Analyst, Physician Payment & Quality
Andrew Amari, Hospital Policy and Regulatory Specialist
Phoebe Ramsey, Sr. Regulatory Analyst, Quality & Payment Policy

The Medicare Payment Advisory Commission (MedPAC) met Nov. 7-8 to discuss a Congressionally requested report on provider consolidation, findings from MedPAC staff’s stakeholder interviews on increasing the supply of primary care physicians, and redesigning the Medicare Advantage (MA) quality bonus program.

Provider Consolidation

MedPAC staff opened the meeting with a presentation on a request from Congress on health care provider consolidation. This request was made in Aug. 2018 and focused on three main areas: hospital consolidation, physician-hospital integration, and effects of the 340B program on hospital use of higher priced prescription drugs. The 340B program will be discussed at the Jan. 2020 meeting.

The report from staff focused on both mergers of hospitals and physician practices, along with the acquisition of physician practices by hospitals. Staff noted that since 2003, highly consolidated markets have increased and new competitors rarely entered these markets. In the request, Congress asked about the role of federal policy in hospital consolidation, which MedPAC staff reported did not appear to be driving the increase in consolidation.

The Congressional request also asked for information on how consolidation affects health care costs. While staff did not find statistically significant results on the impact of hospital consolidation on costs, they did note that physician practice acquisition by hospitals did lead to both increased prices and spending. This is attributed, among other things, to a site of service differential when a physician practice is converted to a hospital outpatient department (HOPD). Staff reported to commissioners that since 2012, billing has shifted from physician offices to HOPDs in multiple specialty areas. During the discussion, commissioners requested that staff look in further detail at insurer consolidation data, especially at the national level, and the effect on health care prices. Commissioners will continue to discuss this topic at future meetings and staff will report on the 340B aspect of consolidation at the Jan. 2020 meeting.

Primary Care Physician Shortage

MedPAC staff conducted interviews with leaders from medical schools, primary care residency programs, and geriatric fellowship programs, among other stakeholders [see Washington Highlights, Mar. 8]. Staff sought to determine unique practices of medical schools that recruit and graduate higher percentages of students that enter primary care. Interviews also focused on why the percentage of residents training in primary care has declined. Interviewees, staff noted, identified unique recruitment patterns for high primary care medical schools and cited low pay relative to specialists, as well as unrepresentative and low-quality primary care rotational experiences as reasons for the decline in primary care residents.

During the discussion portion, commissioners questioned whether primary care was the only group of practitioners facing a shortage, suggesting that a broader inquiry on the physician workforce may be appropriate. Commissioners also suggested potential policy solutions that included expanding and improving primary care clinical rotation opportunities at medical schools, temporarily or permanently lifting the Medicare graduate medical education (GME) slot restriction for primary care residencies, and targeting funding to hospitals that wish to create new primary care residency programs. Other commissioners suggested creating a pathway for mid-career physicians that may want to switch to primary care. Staff will evaluate whether more interviews are necessary as they develop and finalize the chapter. 

MA Quality Bonus Program

Commission staff presented on a potential concept, a value-incentive program (MA-VIP), to redesign assessing quality in MA to respond to the deficiencies seen in the current quality bonus program that leaves MedPAC unable to assess MA quality in a meaningful way. The MA-VIP would largely mirror the commission’s Hospital VIP (HVIP) concept. This is intentional to allow for comparisons of quality across Medicare programs (traditional fee-for-service, MA plans, and accountable care organizations in local market areas).

The MA-VIP would score Medicare Advantage Organizations (MAOs, or parent organizations) at the local market area assessed against national performance targets for a small set of measures across four domains: ambulatory care sensitive hospitalizations, readmissions, patient-reported outcomes composite, and a patient/enrollee experience composite.

Similar to the HVIP design, the incentives would be funded by an initial withhold that could be earned back and outcomes measures would not include risk adjustment for social risk factors. Instead, commission staff modeled a system that differs from HVIP and would split two groups for each parent organization in a market area: fully dual-eligible beneficiaries and non-fully dual-eligible beneficiaries. Commissioners were supportive of an ability to compare quality across Medicare.

Commissioners wanted more analysis of whether the local market area was the right unit of analysis and strongly urged staff to explore other ways to stratify for social risk factors, like the area deprivation index. The commission will continue to discuss the merits of the MA-VIP in future public meetings.

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