Skip to Content


Filter by:



Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

MedPAC Discusses Medicare Payment Recommendations for its 2016 June Report to Congress

March 11, 2016—The Medicare Payment Advisory Commission (MedPAC) March 3-4 met to discuss policy options and draft recommendations for its 2016 June Report to Congress on various payment systems, including Medicare Part B drug payment, payment for post-acute care (PAC), and telehealth.

The commissioners discussed Chairman Francis Crosson’s, M.D., recommendations to reduce Medicare Part B dispensing and supplying fees and several policy options to restructure Medicare Part B drug payment. Currently, Medicare Part B drugs are paid at 106 percent of average sales price (ASP). The commission is concerned that the six percent add-on payment may serve as an incentive for physicians to prescribe higher-priced drugs. MedPAC staff presented four policy options to restructure Medicare Part B drug payment:  

  • 103.5 percent of ASP + $5 per drug per day;

  • An ASP inflation cap to limit ASP growth over time;

  • Consolidated billing codes of drugs of similar health effects as a way to promote price competition; and

  • Restructuring the competitive acquisition program that uses vendors to purchase Part B drugs and provide for physicians. 

Commissioners stated that more focus should be put on the ASP instead of the six percent add-on payment because there is not enough evidence to determine whether the six percent add-on is a driving force behind prescribing higher-priced drugs.

The commissioners continued their discussion on the development and implementation of a Prospective Payment System (PPS) for PAC. MedPAC staff addressed the development of two outlier policies for both high-cost and short stay patients. These policies could account for the limitations in the risk model. Commission staff believe the risk model is sufficient to eliminate the need for additional adjustments, such as an inpatient rehabilitation facility (IRF) teaching adjuster. However, they suggested that further studies should be conducted for highest-acuity patients and providers with high shares of low-income patients. 

Commissioners were very supportive of the model and discussed the potential of CMMI pilot projects and demonstrations to test the model prior to broad scale implementation. They also acknowledged that it would be necessary to waive certain requirements and implement companion policies to protect beneficiaries and program spending, such as a readmission policy and measuring Medicare Spending per Beneficiary (MSPB).


The commissioners have previously expressed an interest in learning about telehealth and its prevalence within the Medicare program. MedPAC staff presented definitions for six different types of telehealth that fall into the broad categories of basic medical care and consultations, remote monitoring, and store-and-forward transmission.

According to commission staff, minimal telehealth is currently offered by insurers and providers, except within the Department of Veteran Affairs (VA), which has been using telehealth services for over a decade. There will be a chapter included in the June Report, but no recommendations will be made.

Contact:

Ayeisha Cox, J.D.
Hospital Policy & Regulatory Specialist
Telephone: 202-282-0482
Email: aycox@aamc.org

Jennifer Faerberg, MHSA
Director, Clinical Transformation Unit
Telephone: 202-862-6221
Email: jfaerberg@aamc.org


.

envelope on a green background

Subscribe to Washington Highlights

RSS icon

Subscribe to RSS

Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


Past Issues


For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org