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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 Part B Payment Policy and How to Support Primary Care

January 19, 2017—The Medicare Payment Advisory Commission (MedPAC) Jan. 12-13 meeting included discussions about changes to how Medicare reimburses drugs under Part B and the role that the current Medicare fee schedule has in supporting primary care.

MedPAC staff introduced a package of potential reforms for Medicare Part B drug payment policy to address increases in Part B drug spending. The proposed reforms would seek to improve the current average sales price (ASP) system and reduce the ASP add-on to encourage enrollment in a Drug Value Program (DVP).

Among the proposed reforms, the DVP would give the Secretary authority to use private vendors to negotiate prices under Medicare Part B and offers providers shared savings opportunities. Providers could choose to voluntary enroll in the DVP or the revamped ASP system.

Some Commissioners commented that reducing the ASP add-on payment would likely not change prescribing behavior, and noted that the viability of the DVP would heavily depend on participation of vendors. 

According to MedPAC staff, primary care services are underpriced in the Medicare fee schedule, and noted that there are wide income disparities between primary care and non-primary care physicians. 

MedPAC staff offered three options to better support primary care. 

  • Option 1: Establish per beneficiary payment for primary care based on amount of Primary Care Incentive Payment (PCIP) program payments which are approximately $700 million. 

  • Option 2: Increase per beneficiary payments to $1.2 billion: $700 million from option 1 plus $500 million from the Merit-based Incentive Payment System (MIPS) exceptional performance bonus.

  • Option 3: Allow primary care physicians in all 2-sided Accountable Care Organizations to receive a portion of payments for primary care visits as upfront payment, in addition to per beneficiary payment from Option 2.

While most Commissioners favored Option 2, there was general consensus that future work should focus on a more holistic approach of comparing high-value primary care services vs. non-primary care services. Commissioner Alice Coombs, MD, highlighted AAMC’s work on the physician workforce and how the shortage of primary care physicians should be addressed in the short term.

Contact:

Mary Mullaney
Director, Hospital Payment Policies
Telephone: 202-909-2084
Email: mmullaney@aamc.org

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

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


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