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  • Washington Highlights

    MedPAC Releases June 2020 Report to Congress


    Mary Mullaney, Director, Hospital Payment Policies

    The Medicare Payment Advisory Commission (MedPAC) released its June 2020 Report to the Congress on Medicare and the Health Care Delivery System.

    Some of the topics discussed in this year’s report include payments for separately payable outpatient drugs, promoting value-based care in Medicare fee-for-service and Medicare Advantage (MA), increasing savings from accountable care organizations (ACOs), and changes to the Medicare Part D program.

    MedPAC is an independent congressional agency that advises Congress on issues affecting Medicare.  

    In the report, the commission looks at separately payable drugs in the hospital Outpatient Prospective Payment System and concludes that an effective payment system of separately payable drugs should have two features: (1) drugs that are the purpose of a visit, are high cost, treat a condition, and are usually administered by infusion should be paid separately because they are not ancillary; and (2) drugs should show a clinical superiority over other drugs to have separately payable status.

    The report outlines changes to the Medicare fee-for-service program that would develop new payment models that promote the use of value-based care. The proposal is aimed at identifying changes that broaden the use of value-based payment by encouraging more providers to organize into “accountable entities.” Such entities would be capable of receiving payments from Medicare while accepting accountability for both the cost and the overall health of a group of beneficiaries. Medicare Advantage and ACOs could serve as vehicles to broaden the use of value-based payment, but both programs need to be improved to realize that potential. 

    The report discusses the challenges in maintaining and increasing savings from ACOs. The commission evaluates past savings, examines strategies to increase savings, and recommends a technical change that will reduce the risk that program vulnerabilities might result in unwarranted shared savings payments to ACOs that exceed the rate of savings achieved to this point.

    The commission outlines a set of principles under a newly created MA value incentive program (MA-VIP) that would replace the current Medicare Advantage quality bonus program (QBP). MedPAC describes the modeling of the MA-VIP, which it believes demonstrates that the MA-VIP produces a better way of measuring plan quality and relative to the QBP, more fairly treats plans that disproportionately enroll populations with certain social risk factors.

    Also included is a mandated report on the impact of changes in the 21st Century Cures Act (P.L. 114-146) that directs MedPAC to evaluate the impact of the changes the Centers for Medicare and Medicaid Services (CMS) has made to the CMS Hierarchical Condition Category model that is used to risk-adjust payments in the MA program. The commission acknowledges the work CMS has made and encourages CMS to continue work to complete the requirements by January 1, 2022, as mandated.

    Finally, the commission proposes a package of recommendations to reform Medicare Part D to limit enrollees’ out-of-pocket spending; realign plan and manufacturer incentives to help restore the role of risk-based, capitated payments; and eliminate features of the current program that the commission believes distorts market incentives.