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  • Washington Highlights

    MedPAC Discusses Restructuring Part D, Payment Adequacy Analysis Methods, and Population-based Outcomes Measures

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

    The Medicare Payment Advisory Commission (MedPAC) met Oct. 3-4 to discuss Medicare payment policy topics including restructuring Medicare Part D, how the commission assesses the adequacy of Medicare payment for physicians, and the opportunity for new population-based outcome measures to assess the quality of ambulatory care systems.

    Restructuring Medicare Part D

    MedPAC staff presented on potential ways to restructure Medicare Part D. Staff discussed several policy options that would eliminate the existing coverage gap discount (CGD), create a unified benefit for enrollees both with and without the low-income subsidy (LIS), and redesign the catastrophic benefit.

    The policy to eliminate the CGD would make plan sponsors responsible for 75% of all drugs and biologics up to the out-of-pocket threshold for non-LIS beneficiaries. Moreover, in creating a unified benefit for LIS and non-LIS enrollees, staff suggested that for LIS beneficiaries in the coverage gap, plans would cover 75% of liabilities where they previously had no liability before. Finally, staff discussed potentially redesigning the catastrophic benefit with a new manufacturer discount, capping beneficiaries’ out-of-pocket spending, increasing plan liability, and lowering Medicare reinsurance.

    During their discussion, commissioners focused on the role of reinsurance in Medicare Part D. Several commissioners suggested that, while Medicare should not eliminate its reinsurance, it should consider ways to make Medicare reinsurance more closely resemble the private reinsurance model. Moreover, commissioners expressed concern that a unified benefit for LIS and non-LIS enrollees may not be appropriate for all beneficiaries in different income strata.

    Commissioners also agreed that restructuring Part D should address how to better incentivize the introduction of biosimilars in the market. Among these more specific comments, commissioners emphasized that the changes to Medicare Part D, as outlined by staff, would be among the most significant to the program since its inception. As a result, commissioners requested further analysis of these issues considering their questions and discussion on the topic, which will be revisited in future meetings.

    Updates to the Methods Used to Assess the Adequacy of Medicare Payment for Physicians and Other Health Professional Services

    Staff presented updates to methods used to assess the adequacy of payments for physicians and other health professional services, focusing primarily on the role of hospitalists. Staff noted that they are considering two changes to the methodology in this area.

    First, staff suggested carving out the classification for hospitalists from the broader category of primary care, which also captures internal medicine, family medicine, geriatric, and pediatric physicians, for future analyses. MedPAC staff noted that nearly all hospitalists have been included in the count of primary care physicians because they self-designate as internal medicine. Having a separate designation for hospitalist could provide more thorough analysis. While nearly all hospitalists are board certified in internal medicine and do not require a sub-specialization, staff felt that their role as an inpatient provider is sufficiently different from an outpatient primary care physician that a separate designation could be worthwhile.

    This also affects access and payment adequacy analyses; when hospitalists are excluded from a broader primary care count, staff note that the count of primary care physicians is lower, though this does not change the broader MedPAC conclusion that beneficiary access to care is adequate. During discussion, commissioners were generally supportive of separating hospitalists in future analysis, though this did lead to a broader discussion of the role of primary care providers, both in inpatient and outpatient settings, and a discussion of the primary care workforce pipeline.

    Staff also presented a proposal to revise how MedPAC has traditionally analyzed volume (number of services x RVUs), noting that this method was sometimes not sensitive to shifts in site of service. Staff suggested two new methods to calculate volume: an access measure that captures patient encounters with clinicians and a spending measure that captures allowed charges. The commissioners were generally supportive of these methods but noted further discussion and analysis will be needed.

    Population-based Outcome Measures: Avoidable Hospitalizations and Emergency Department Visits

    MedPAC staff presented on two potential claims-based population-based quality measures that the commission could use to evaluate the quality of ambulatory care for Medicare beneficiaries: avoidable hospitalizations and emergency department (ED) visits. MedPAC staff’s analysis of the two measures was initially conducted only on fee-for-service (FFS) claims and excluded analysis of FFS accountable care organization (ACO) performance or Medicare Advantage plans.

    Instead, the analysis focused on assessing rates of avoidable hospitalizations and ED visits for both chronic and acute conditions as a measure of ambulatory care systems at the MedPAC market area level and the hospital service area level, finding great variation between the 10th and 90th percentiles of performance. Discussion of the presentation focused on themes relating to the nomenclature of “avoidable,” what improvements would be necessary in order to transition the measures from surveillance to accountability measures, and whether the commission should take the time to consider measures that incentivize better quality rather than those that measure the adverse effects of poor quality.

    Other topics discussed include improving Medicare payments for low-volume and isolated outpatient dialysis facilities, aligning benefits and cost sharing under a unified payment system for post-acute care, and policy options to modify the hospice aggregate cap.