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More From the MedPAC Report to Congress

By March 26, 2019Commentary

Today we will continue with a look at what the Medicare Payment Commission had to say about provider types other than hospitals and about Medicare Advantage.  (link in yesterday’s post)  In regard to physician and other clinician services, the Commission didn’t have much to say.  Provider participation is high, indicating that access is not an issue; and quality measures show stability or improvement, so no change in current reimbursement was recommended.  Physicians on average get paid by Medicare 75% of what commercial health plans pay them.  I am a little puzzled by how MedPAC ignores this obvious subsidization.  For some other provider types the Commission also suggested little change in rates, for example, ambulatory surgery centers.  For others, like inpatient rehabilitation facilities, they found that margins were actually quite high and recommended a substantial 5% payment reduction, while long-term care hospitals would receive a slight 2% increase in reimbursement.  Hospices also had relatively significant Medicare margins, about 10%, so MedPAC suggested a 2% reduction.   Post-acute care has received a lot of attention in recent years, for potential abuse and overpayment, particularly for skilled nursing facilities and home health care.  Several new methods of payment have been proposed.  MedPAC continues to suggest that a unified payment method be used to avoid game-playing across provider types.  Margins for both SNFs and home health are relatively high and MedPAC would like to see those rates decreased.

For the Medicare Advantage program, the Commission also finds status is generally good.  Payment has generally become equalized with fee-for-service arm spending per beneficiary, although MedPAC continues to express concerns about the star rating bonus system.  Similarly, the Commission views the Part D drug program as a success but expressed concern about the level of reinsurance payments and the need to reform how plans are reimbursed.  The overall picture is that most provider types are not in dire financial straits, beneficiaries have good access, quality is stable or improving, access to capital appears adequate.  But MedPAC in the introduction to the report attempts to put Medicare in the national economic and government spending context.  The information presented makes it clear that Medicare, combined with Medicaid and other health spending, is putting us on a completely unsustainable path, and a very short path at that.  The shrinking ratio of workers to beneficiaries puts enormous stress on younger people trying to start careers and families.  We are going to have to do a serious rethink about the nature of these entitlement programs, including about how long people should work before they have access to them and whether wealthier people who have the assets and/or income to pay for their own health care should be subsidized at all.

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