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  • Washington Highlights

    MedPAC Discusses Medicare Advantage, Hospital Payment Updates, and MIPS

    Gayle Lee, Director, Physician Payment & Quality
    Mary Mullaney, Director, Hospital Payment Policies

    The Medicare Payment Advisory Commission (MedPAC) Jan 11-12 met to discuss Medicare payment issues, including the Medicare Advantage (MA) program, hospital payment updates, and the Merit-based Incentive Payment System (MIPS).

    Medicare Advantage Program

    Commissioners unanimously voted to require MA plans from different geographic regions that consolidate to report quality measures based on the geographic region and not on the higher rated consolidated plan. Staff noted a trend by MA contracts to consolidate in order to positively impact its MA Star Ratings. MedPAC is concerned that beneficiaries may not be receiving accurate information about the quality and performance of the local plan.

    Medicare Prescription Drug Program (Part D)

    Commissioners unanimously voted to approve the draft recommendation to require biosimilar products manufacturers to pay the coverage gap discount and exclude the discounts from beneficiary true out-of-pocket spending (TrOOP) in an effort to slow the rate of beneficiaries reaching the catastrophic phase. Currently, brand-name drug manufacturers are required to provide a 50% discount during the coverage gap. Biosimilar products are excluded from this requirement.

    Hospital Payment Updates

    Commissioners unanimously voted to approve the chairman’s draft recommendation that Congress increase the 2019 Medicare payment rate for acute care hospitals by 1.25 percent as codified in current law. The chairman’s recommendation was based on the rationale that “beneficiaries maintained good access to care, providers maintained strong access to capital, outpatient volume growth remained strong, and quality improved, despite negative Medicare margins.” However, several commissioners raised concerns whether the deteriorating Medicare margins are sustainable.

    MIPS Recommendation and Vote

    MedPAC voted to recommend that Congress eliminate the current Merit-based Incentive Payment System (MIPS) and establish a new voluntary value program. Under this program clinicians would have a portion of fee schedule payments withheld and then could elect to be measured with a large entity of clinicians on a set of population based measures and be eligible for the value payment, or elect to join an Advanced Alternative Payment Model and receive the withhold back, or make no election and lose the withhold.

    Only two commissioners voted against the recommendation, although discussion prior to the vote made clear that while the commissioners were in consensus to recommend the elimination of MIPS, there was disagreement around the parameters of the voluntary value program. The discussion also made clear the commissioners would like to spend more time providing additional detailed recommendations on the replacement program, should Congress move forward with ending MIPS.

    Votes on Recommendations for ASCs, Dialysis Centers, Hospice, and PAC Settings

    Additionally, the commissioners voted through an expedited review process to finalize recommendations related to ambulatory surgical centers, outpatient dialysis services, hospice, and post-acute care settings.

    Report on Hospital Readmission Reductions Program

    MedPAC staff also presented a mandated report evaluating the effects of the Hospital Readmission Reductions Program (HRRP). Staff observed that the program did not appear to affect mortality rates negatively, but they did acknowledge that there could be more to study, considering the growth in literature and study of the impacts of the HRRP. Staff intend to bring forward ideas for potential improvements for discussion this spring. One potential recommendation would be to consider expanding the program to cover all conditions and refining the penalty formula.


    MedPAC staff presented the next in a series of mandated reports on telehealth, with a final report due to Congress by March 15, 2018. Staff discussed the relatively low utilization of telehealth, noting that data suggest telehealth evaluation and management services (E&M) supplement but do not substitute, in-person E&M visits. The most robust evidence of success in terms of cost savings are telestroke programs; however, comments were made stating that cost should not necessarily be the primary concern when looking at telehealth broadly. Commissioners voted unanimously that this report should move forward.

    Rebalancing Physician Fee Schedule

    MedPAC staff provided a status report on the underpricing of ambulatory E&M services in the physician fee schedule, raising concerns about primary care payment in the Medicare program. An option raised to address this was to increase payment rates for ambulatory E&M and psychiatric services for all clinicians who provide those services. In order to maintain budget neutrality, a 4.5% reduction in payment rates was proposed for all other services. The commission also discussed making special payments to primary care clinicians in addition to the 10% increase in E&M payment rates. Discussion among the commissioners acknowledged primary care clinician shortages, and whether or not this payment adjustment would address the problem. The commission will continue discussing this issue at future meetings.

    Medicare ACOs

    MedPAC staff presented a status report on Medicare Accountable Care Organizations (ACOs), stating that the ACOs have consistently high overall quality scores, and at least average results on population-based measures. Staff also reported that two-sided risk ACO models results in higher net savings to Medicare compared to one-sided risk models, and the shared savings for Medicare shared savings program (MSSP) ACOs is higher with historical service use. The commission will continue discussion of Medicare ACOs at future meetings.