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  • Washington Highlights

    MedPAC Discusses MIPS, Hospital Payment Policy, Medicare Advantage

    Mary Mullaney, Director, Hospital Payment Policies
    Kate Ogden, Physician Payment & Quality Specialist

    The Medicare Payment Advisory Commission (MedPAC) Dec 7-8 met to discuss a wide variety of Medicare issues, including alternatives to the Merit-based Incentive Payment System (MIPS), which Congress established as part of the restructured Medicare payment system for physicians. Commissioners also discussed reports on hospital payments and the Medicare Advantage program.

    Following up from previous meetings, MedPAC commissioners considered replacing MIPS with a voluntary value program. Under this program, clinicians would have a portion of their fee schedule payments withheld, with their payment rates adjusted, based on how the hospitals opted to be measured. The hospitals could elect to be measured with a large entity of clinicians on a set of population-based measures and be eligible for a value payment. Or they could elect to join an Advanced Alternative Payment Model and receive the withholding back. Additionally, they could make no election and lose the funds that were withheld for them.

    During the MedPAC meeting, only one commissioner spoke out against the recommendations, while many others indicated support. MedPAC is scheduled to vote on this recommendation during its January 2018 pubic meeting.

    On the hospital side, MedPAC Chair Francis J. Crosson, MD, shared a draft recommendation urging Congress to increase the 2019 payment rate for acute care hospitals by 1.25 percent as codified in the 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 about whether the deteriorating Medicare margins are sustainable. MedPAC staff highlighted that hospitals’ Medicare aggregate margins were negative 9.6 percent in 2016 and projected to be negative 11 percent in 2018. The median margin of the most efficient hospitals fell to negative 1 percent in 2016.

    MedPAC staff also provided a status report on the Medicare Advantage (MA) program. Staff indicated that there has been an 8 percent growth in MA enrollment in 2018, which is an increase from 2017. Commission staff also noted that total Medicare beneficiary enrollment in MA plans has risen to 32 percent. They discussed how MA plans often consolidate, and they raised concerns that these consolidations, particularly for plans with different star ratings scores, may not be representative of performance in a local area and may result in an unfair competitive advantage in a given market.

    The draft recommendations included comments on plan consolidation, noting that the Health and Human Services Secretary should require contracts to report pre-consolidation quality measures and determine star ratings as though the consolidation had not occurred for MA contract consolidations involving different geographic areas. The recommendations also stated that the Secretary should establish geographic areas for MA quality reporting and calculate star ratings for each contract at that geographic level.