One area which MedPAC focussed on is the role of drug spending in Medicare’s financial status. In addition to Part D drug coverage, Medicare makes significant payments, $21 billion in 2014, for drugs through Part B, which covers certain drugs administered in a physician setting. (link to report in yesterday’s post) Recognizing both that physicians can pay high prices for these drugs and that they also make a lot of money dispensing them, CMS has attempted several reforms and proposed new ones. The commission suggests potentially changing the current 6% of ASP add-on fee to a flat fee and suggests finding ways to encourage competition to lower ASPs used by Part B. Cancer drugs represent about half of this Part B spending and MedPAC proposes some specific ideas, similar to some initiatives in the commercial plan world, to bundle spending and care for the entire episode of cancer treatment.
The Commission also examines Part D. Currently the program protects drug benefit plans through a reinsurance program and protects beneficiaries from large drug expenses. These provisions are due for an overhaul, as they may actually exacerbate spending growth, expected to accelerate over the next few years. It is particularly hard to understand why CMS extends reinsurance protection to the drug benefit plans, most of which are large entities completely capable of bearing the financial risk and pricing for it appropriately.
Given the struggles that telemedicine has encountered in expanding, even though it offers obvious promise for better care access and lower unit costs, it is not surprising that MedPAC examines how it may be used to maximum benefit in Medicare. The Commission notes concerns about whether use of telemedicine is substitutive or represents new demand which may add to costs. I consider this irrelevant, as the question should be whether telemedicine or in-person services are appropriate care. If beneficiaries need a service and have been unable to get it because of access or cost barriers, it doesn’t matter if use of telemedicine represents added cost–the patients needed the care, and telemedicine is probably a cheaper way to get it. In my judgment, MedPAC is too timid about the value of encouraging much greater use of telemedicine, both in rural areas and underserved urban areas.
The report covers a couple of other areas as well, and is well worth diving into to get an informed perspective on many facets of Medicare.