Every year the Medicare Payment Advisory Commission delivers a report to Congress on the status of the Medicare program. It is lengthy but has a good summary at the start. This really should be required reading for every Medicare-eligible person and those near eligibility. This program is in desperate financial trouble. The reports typically cover not just the financial condition of the program but other important issues. (MedPAC Report)
One chapter covers the ongoing attempts to change how Medicare pays physicians and other clinicians to more of a value-based or outcomes methodology. This stems from long-standing concerns about excessive ordering and use of certain services. A variety of alternative payment methods have been considered, but seem to have made little impact on Medicare spending. This is going to become more important as a number of provider groups are dropping out of Medicare Advantage plans and their patients may end up in traditional Medicare. In general, the unit payment rates for Medicare have experienced low increases in recent years and the Commission appropriately expressed concern about the impact on physician practices, which are seeing higher costs of being in business. This is one factor in continued consolidation of physicians into large health systems.
Another chapter looks at the adequacy of provider networks in Medicare Advantage and the use of prior authorization. Network adequacy appears acceptable so far, but as mentioned above some provider groups are dropping participation and partly are blaming prior authorization. The reality is that prior authorization is rarely used and the provider groups are just hoping to be able make more by excessive use in traditional Medicare. 95% of prior authorization requests are approved, and many of those that are denied are approved on appeal.
The Commission turns next to adequacy of data about utilization in Medicare Advantage. Many Medicare Advantage plans have payment arrangements with providers under which individual claims are not paid, the group just gets a regular monthly payment to cover all services. The providers are supposed to submit encounter data detailing all services provided to members, but that does not happen with regularity, making it difficult for MA plans to comply with reporting requirements. This is a critical issue–in the absence of complete data it is difficult to really compare patterns of use and spending and outcomes between MA and traditional Medicare. And the encounter data are necessary to accurately set and monitor payments to the MA plans by Medicare.
Next up was a discussion of the FDA’s expanded policy for approving software for medical uses and subsequent issues about reimbursement by Medicare for such use. The potential for abuse is high; there is a lot of medical software out there aimed at consumers and it generally has not shown significant benefits. Medicare could end up wasting a lot of money if it doesn’t require substantial proof that the software improves health or lowers costs.
Other chapters review payment methods for rehabilitation hospitals and experience to date with hospital at home models. Large health systems are playing games with sending patients to rehabilitation hospitals or skilled nursing facilities depending on where they get the most reimbursement. The Commission has expressed concern about whether patients are being sent to rehab hospitals who don’t need that intensive level of care. Hospital at home is an interesting concept which so far has been used largely for chronic disease like heart failure or chronic respiratory difficulties. Early evidence does not yet show strong benefits such as lower costs or better outcomes, but given shortages of beds in some areas, this seems to be something worth pursuing.
