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MedPAC’s 2016 Report to Congress

By July 11, 2016Commentary

The Medicare Payment Advisory Commission sends an annual report to Congress in which it addresses issues it views as most pressing or on which CMS or Congress are deliberating.  MedPAC’s 2016 report as usual gives interesting insight and perspective not only on Medicare but on topics of interest for the health care market more generally.   (MedPAC Report)   Today we will cover some of the recommendations and observations and tomorrow the remainder.   The first issue relates to Medicare Part B premiums.  Medicare beneficiaries are required to pay a percent of the total Part B costs and this amount is to a large extent allocated according to income–wealthier individuals pay much higher Part B premiums  (note that Part B premiums are different from the Part B service cost-sharing which is generally in the form of co-insurance).  MedPAC suggests setting premiums in a manner that encourages beneficiaries to choose either FFS Medicare or Medicare Advantage, depending on which is more efficient in the beneficiaries geographic region.  Basically people who wanted to enroll in the more expensive arm of the program in their region would pay a higher premium to compensate for the additional cost to Medicare of their choice.

Next, the Commission gives some thoughts on the recently enacted Medicare physician payment reform known as MACRA.  It believes that the alternate payment entities should be at risk for all of Part A and Part B costs for a beneficiary; that the entity should have a beneficiary population large enough to credibly detect changes in cost and quality; that the entity should have the power to share any savings it generates with beneficiaries; and that clinicians participating in the entity should get incentive payments not just for participation but only if the entity actually improves quality, reduces cost or both.

Post-acute care treatment has been a long-standing problem for Medicare.  There are four settings–home health care, skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals–with separate payment mechanisms that create opportunities for misuse and fraud.  Congress and CMS want to move to a unified payment system and MedPAC gives some ideas.  A unified system could be based on patient and acute stay characteristics that provide a basis for risk adjustment when combined with a common assessment tool.  Home health payments would need to be adjusted downward since they are less costly, with no capital facility cost needed.    Adjustments may also be needed for outlier short stays or outlier high cost treatment.  MedPAC also notes that in the long run, the post-acute care should be bundled into an episode of care payment that includes all aspects of treatment–acute, post-acute and follow-up.  More tomorrow.

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