aamc.org does not support this web browser.
  • Washington Highlights

    MedPAC Recommends Changes to Physician Payments and Hospital Payment Updates

    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 Jan. 17-18 to approve recommendations on physician payments and hospital payment updates. The commission also discussed Medicare prescription drug pricing and performance in the Medicare Shared Savings Program (MSSP).

    Physician Payments: MedPAC staff presented on payment adequacy and payment updates for physicians and other health professionals, and payment policies for advanced practice registered nurses (APRNs) and physician assistants (PAs). Staff presented three draft recommendations as a continuation from the December meeting where they were asked to bring the recommendations to a vote [see Washington Highlights, Dec. 7, 2018]. The commission unanimously passed these recommendations:

    • For calendar year (CY) 2020, Congress should increase the CY 2019 Medicare payment rates for physicians and other health professional services by the amount specified in current law;

    • Congress should require APRNs and PAs to bill the Medicare program directly, eliminating “incident-to” billing; and

    • The Health and Human Services Secretary should refine Medicare’s specialty designations for APRNs and PAs.

    Hospital Payment Updates: Commissioners unanimously voted to approve the draft recommendation to congress for fiscal year (FY) 2020 to update acute care hospitals’ base payment rates by 2% and replace Medicare’s current hospital quality programs with the new hospital value incentive program (HVIP) that provide a projected 0.8% HVIP add-on to the base payment update. Commissioners expressed reservations about the short timeline and the feasibility of implementing HVIP by FY 2020. If HVIP is not implemented, the base payment update in FY 2020 for acute care hospitals would be 2% and would not include the 0.8% HVIP add-on.

    Drug Pricing: MedPAC staff presented on a broad group of policy options to address Medicare prescription drug pricing for the commission’s upcoming spring sessions. Staff highlighted both past MedPAC recommendations for Parts B and D, and potential topics to cover this spring, such as broader use of arbitration in Part D price negotiation and outcomes-based pricing.

    Commissioners expressed significant interest in exploring reference pricing and implementing a Medicaid-like rebate in Medicare. However, commissioners emphasized their desire for a means to prioritize the policy options, requesting that staff evaluate the policies’ impact on spending, beneficiary access, and their overall feasibility. Several commissioners also requested that staff monitor the impact of drug prices on Part A in addition to Parts B and D.

    Medicare Shared Savings Program: MedPAC staff also presented updated analysis on Medicare Accountable Care Organizations (ACOs) in the Shared Savings Program. Notably, the analysis showed that 2017 was the first year of the program that demonstrated savings to the Medicare Trust Funds. Of note, the analysis found an association between changes in assignment of beneficiaries to ACOs and changes in spending, and the impact of prospective assignment versus retrospective assignment for achieving savings for the program. Staff noted that the analysis may call into question the recent changes finalized for the program (see Washington Highlights, Dec. 21, 2018) that would push ACOs into taking on downside risk earlier in their participation (and thus less time to learn) and allowing ACOs to choose prospective or retrospective assignment annually.