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MedPAC Recommends FFS Benefit Changes

 |  By Margaret@example.com  
   June 18, 2012

Medicare's fee-for-service benefit design should be changed to provide better protection against high out-of-pocket cost sharing and to create incentives to encourage beneficiaries to make better healthcare decisions, the Medicare Payment Advisory Commission (MedPAC) said in its latest annual report on Medicare and the healthcare delivery system. The report was released on Friday.



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"The design of the FFS Medicare benefit package…has remained essentially unchanged since the creation of the program in 1965," the commission said in its executive summary. "Over the years, Medicare FFS prices and the amount of services beneficiaries receive have grown dramatically; as a result, some beneficiaries many now incur a very large cost-sharing liability."

The nonpartisan MedPAC is charged with advising Congress on Medicare payment policy issues, including reimbursements to physicians, hospitals, labs and imaging centers. The focus on beneficiaries is a shift for the commission and reflects its position that "how beneficiaries view the Medicare program and how they make decisions about their health care are vital to the program's success."

The report makes recommendations in three benefit areas: benefit design, care coordination in FFS Medicare, and care coordination for dual eligibles.

The commission's recommendations for benefit design include:

  • Cap out-of-pocket beneficiary spending
  • Implement deductibles for Part A and Part B services
  • Replace coinsurance with copayments to enable beneficiaries to better anticipate their medical costs
  • Add cost-sharing for supplemental insurance or so-called Medigap policies, which cover deductibles, coinsurance, and copayments.

The commission contends that although Medigap policies protect beneficiaries from unlimited out-of-pocket expenses, the additional coverage, which usually covers all or almost all of Medicare's cost-sharing requirements, reduces any incentive to avoid costly or unnecessary medical procedures.

The health insurance industry is already pushing back on additional Medigap charges, as well as caps on out-of-pocket costs. America's Health Insurance Plans, an industry trade group, released a poll that says 90% of seniors are satisfied with their existing Medigap coverage and 79% say their policy provides excellent or good value for the money. According to AHIP, Medigap policies had 9.8 million enrollees in 2011.

"Medigap coverage provides seniors with financial security and peace of mind about their health care coverage," said Karen Ignagni, president and CEO of AHIP, in a press statement.

For care coordination in FFS Medicare, the commission's recommendations include:

  • Create a per-beneficiary payment for care coordination
  • Add or modify codes to allow providers to bill for selected care coordination activities
  • Develop payment policies to reward coordinated care and penalize fragmented care.

In its report, the commission cites poor care coordination as contributing to repeated medical tests, poor transitions between care sites, and the "unnecessary use of high intensity settings." Its recommendations are the beginning of an effort to improve care coordination by making it an "integral part of the system providing the care."

The commission's recommendations for care coordination for dual-eligibles include:

  • Improve the Medicare Advantage (MA) risk adjustment to more accurately predict risk across all MA enrollees.
  • Pay providers for the Program of All-Inclusive Care for the Elderly (PACE) based on the MA payment system for setting benchmarks and quality bonuses.
  • Change PACE eligibility criteria to allow nursing home-certifiable Medicare beneficiaries under age of 55 to enroll.
  • Provide prorated Medicare capitation payments to PACE providers for partial-month enrollees.
  • Establish outlier payment caps
  • Publish select quality measures on PACE providers and develop appropriate quality measures to enable PACE providers to participate in the Medicare Advantage quality bonus program by 2015.

The commissioners would like make the PACE program, which is a provider-based integrated care program structured around day care centers, accessible to more beneficiaries. Improving the MA risk adjustment system to more accurately predict risk across all MA enrollees would help make payments for PACE reflect the costs of the PACE program.

MedPAC's interest in care coordination was touted by the American Medical Association in a statement released Friday. "The AMA is very pleased with the focus on care coordination in the report released today by MedPAC. We are especially pleased the report stresses the need for Medicare to recognize and pay for care coordination services that physicians are already conducting, including telephone calls, patient education and medication management. These services are critical to improving patient outcomes, especially for chronically ill patients."

The statement noted that the AMA has been working through its chronic care coordination workgroup to develop new codes and relative values, which will be available for CMS to consider for implementation on January 1.

The MedPAC report was delivered to the offices of Vice President Joe Biden and Speaker of the House John Boehner. Although neither has released an official statement about the report, it is generally accepted that no significant action will be taken on the MedPac recommendations until after the November 2012 elections.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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