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  • Washington Highlights

    MedPAC Meets to Discuss Medicare Advantage and Prescription Drugs

    Mary Mullaney, Director, Hospital Payment Policies
    For Media Inquiries

    The Medicare Payment Advisory Commission (MedPAC) met on Sept. 1 and 2 to discuss potential changes to the benefit design of Medicare Advantage (MA) plans, the hospital wage index, and reimbursement for high-cost drugs paid under Medicare Part B.

    Staff presented an initial framework for potential changes to the Medicare Advantage benefit structure, specifically whether MA plans should be required to have standardized benefit packages including cost sharing. The changes would allow MA plans to develop different cost sharing rules instead of being restricted to using the Medicare fee-for-service rules. Commissioners voiced concern about the need to ensure that changes to the benefit design do not impede access to needed medical care, including specialty services.

    Commission staff also discussed proposals to hospital wage index systems. The presentation noted that the current wage index systems fail to isolate differences in hospitals’ labor costs. Staff noted that the current wage index values reflect hospitals’ market power, employment decisions, and nonempirical wage index exceptions, in addition to geographic differences in labor costs. The proposal’s goal to change the calculation of the wage index would be to more accurately measure the labor costs that differ solely because of geography.

    Finally, staff continued the discussion of ways to address high priced drugs paid under Medicare Part B. Staff noted that the proposals are meant to complement the drug policies included in the Inflation Reduction Act of 2022 (P.L. 117-169). Staff presented three proposals to address certain high-priced drugs: (1) cap payments for certain accelerated approval drugs until postmarket trials are completed, (2) institute reference pricing for drugs with therapeutic alternatives, and (3) change the add-on payment based on lower or higher priced drugs. Future discussions will include recommendations that commissioners will vote on.