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  • Washington Highlights

    MedPAC Discusses Value-based Payment, Accountable Care; Recommends National Coding Guidelines

    Kate Ogden, Physician Payment & Quality Specialist
    Andrew Amari, Hospital Policy and Regulatory Specialist
    Phoebe Ramsey, Director, Physician Payment & Quality

    The Medicare Payment Advisory Commission (MedPAC) met April 4-5 to discuss expanding value-based payment in Medicare, Accountable Care Organization (ACO) performance in the Medicare Shared Savings Program ACO performance, and vote on a recommendation to address the growth of spending on emergency department (ED) services.

    Expanding Value-Based Payment in Medicare

    MedPAC staff presented policy options that would increase the use of value-based payment, proposing that Medicare Advantage (MA) plans and ACOs could provide a foundation for a broader use of value-based payment in the Medicare program. Staff presented four potential scenarios to the commissioners:

    • Medicare continues to operate the traditional fee-for-service (FFS) program. Staff noted that improvements could be made in all three delivery systems.

    • Medicare requires all FFS providers to participate in ACOs. Providers must join an ACO to receive an FFS payment, and Medicare would assign all beneficiaries to an ACO. The Centers for Medicare and Medicaid Services (CMS) would continue to pay claims for ACOs using FFS rates.

    • Medicare stops paying providers directly. MA plans and ACOs would pay providers for services, though CMS would continue producing FFS fee schedules.

    • Medicare stops producing the FFS fee schedules. MA plans and ACOs would pay providers for services, and CMS would not produce FFS fee schedules.

    During discussion, Commissioners noted that each of these options would have implications beyond expanding value-based payment; for example, the second scenario could affect the any-willing-provider policy and beneficiary choice. Additionally, commissioners discussed potential access issues if all providers were required to participate in an ACO, as some providers may not have the interest to participate or participating may not be an option in their area.

    Commissioners expressed preference for the second option, though acknowledged the need for further study. Commissioners agreed that expanding value-based payment in the Medicare program should be a priority, and that these options should be further studied for presentations in the fall.

    Analysis of Medicare Shared Savings Program

    MedPAC staff also presented updated analysis to Commissioners on Medicare ACOs in the Shared Savings Program (SSP), elaborating on the impacts and potential causes of beneficiary assignment fluctuation. In January’s meeting [see Washington Highlights, Jan. 18, 2019], staff demonstrated that due to the CMS’s attribution methodology, a portion of beneficiaries switch in and out of ACOs, and those whose assignment fluctuates tended to have higher growth in spending from 2012-2016 than those whose assignment did not. Additional analysis found that beneficiaries with fluctuating ACO assignments have higher spending growth than the market average, and the switching can coincide with change in health care use. Overall, dynamic swings in attribution, coupled with modest savings in the program to date, led the Commission to begin discussing whether or not future ACO discussions should move towards a recommendation for prospective attribution in Medicare ACOs and remove the option for an ACO to use retrospective attribution. Ultimately, further analysis is needed to inform any future recommendations.

    Emergency Department Spending

    Commissioners unanimously voted to approve a draft recommendation to Congress to develop and implement a set of national guidelines for coding hospital ED visits under the outpatient prospective payment system by 2022. The vote follows MedPAC’s discussion during its March meeting on slowing the growth of spending for ED services [see Washington Highlights, March 8]. MedPAC staff plans to present other policy options to address Medicare spending for ED services this coming fall.