MedPAC’s Annual Report I

MedPAC is an independent commission set up to examine and advise Congress on issues relating to the Medicare program.  Each year it puts out a report looking at certain critical issues.  The information provided in the report often has relevance beyond Medicare.  This year’s report covers several interesting topics and has as its overall theme the aligning of incentives among patients, providers and the program.   (MedPAC Report) The report covers CMS’ ability to adopt innovative policies, changing the program’s benefit design, physicians’ provision of ancillary services in their offices, inpatient psychiatric facilities, shared decision-making, medical student payments, quality improvement efforts and improving care for dual Medicare/Medicaid beneficiaries.

Three innovative policies, all related to coverage or reimbursement, are discussed.  One is reference pricing, under which a single payment is set for clinically comparable services, usually at the cost of the lowest-priced of the alternatives.  Another is performance-based risk sharing, in which a product developer who wants coverage would get paid based on changes in beneficiary outcomes.  The third is coverage with evidence development, in which Medicare would conditionally cover a product or procedure while the owner gathered sufficient clinical data to justify longer-term coverage.

In regard to benefit design, the report notes that because Medicare’s cost-sharing has no limits, many beneficiaries have supplemental policies and those persons tend to use more services and cost Medicare more.  MedPAC recommends considering a cap on beneficiary cost-sharing and/or requiring supplemental insurers to have copays for some services.  Ultimately, Medicare should move to value-based design, where there is no or low cost-sharing for cost-effective services and high cost-sharing for dubious ones, with similar incentives to use higher quality, more efficient providers.

The report suggests that quality improvement can be better supported by widening the range of technical assistance given to providers and by revising conditions of participation to strengthen quality and quality improvement requirements.   More tomorrow.