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MedPac: No Change for Doc Pay

By MedPage Today  
   March 17, 2016

Current Medicare payments are seen as 'adequate,' writes the Medicare Payment Advisory Commission in its latest report. From MedPage Today.

This article was originally published by MedPage Today.

One of the most interesting things about the Medicare Payment Advisory Commission's (MedPAC) most recent report to Congress is what it didn't say -- it didn't suggest increasing physician reimbursement under Medicare.

"The evidence suggests that payments for physicians and other health professionals are adequate," wrote the authors of the report, which was released Tuesday. "Therefore, the commission recommends the [update suggested under] current law for 2017."

What's interesting about that recommendation "is in years past, there has been an assessment by MedPAC that primary care physicians aren't paid properly -- that there are problems with the fee schedule and there's a negative affect on primary care physicians," said Ann Hollenbeck, JD, of the Honigman law firm in Detroit, in a phone interview. "They're not raising that same concern again, which has been a real and perceived concern for many years. That surprises me."

MedPAC did suggest cutting the payments made for drugs purchased by 340B hospitals. "Reducing the price Medicare pays 340B hospitals for separately payable Part B drugs ... would accomplish two things," the report said. "First, it would reduce beneficiary cost sharing. Second, it would reduce program spending for Part B drugs by approximately $300 million -- funds that could be reallocated within the hospital sector to support the Medicare-funded uncompensated care pool."

Under the 340B program, hospitals with high percentages of Medicaid and low-income Medicare patients receive substantial discounts from drug manufacturers for drugs covered by Medicare Part B -- discounts amounting to an aggregate 34% of the drugs' average sales price (ASP), according to the Office of Inspector General at the Department of Health and Human Services.

However, Medicare reimburses the hospitals at 106% of the ASP for the drugs. As a result, "Medicare payment rates are much higher than the acquisition costs of Part B drugs at these hospitals," the report noted. Under MedPAC's proposal, Medicare would cut the reimbursement by 10% and use the savings to reduce beneficiary out-of-pocket costs and to pay for hospitals' uncompensated care.

The 340B program has been under scrutiny for the latest 3-5 years, "the question being one of fairness because there are such substantial savings," said Hollenbeck. MedPAC's proposal "certainly upsets the apple cart as to how it's historically been done, but it upsets the apple cart to the extent of 10%. So they are not suggesting we revamp how 340B works. Instead it's taking a 10% slice of the savings and saying, '10% of it we want to try to distribute more fairly.'"


The 340B hospitals had a more severe view of the proposal. "What MedPAC proposes is a radical restructuring of the 340B drug pricing program," Randy Barrett, vice president of communications for 340B Health, a coalition of 340B hospitals and health systems, said in a statement.

"It is a solution in search of a problem -- and one that would negatively impact many safety-net hospitals and their communities. Now is not the time to consider fundamental changes to the program, especially as 340B hospitals struggle to meet the needs of their low-income and underserved populations in an era of rapidly increasing drug costs."

MedPAC also recommended that Medicare not take health assessments into account when risk-adjusting payments in the Medicare Advantage program, Edwin Park, JD, vice-president for health policy at the Center on Budget and Policy Priorities, a left-leaning think tank here, noted in an email to MedPage Today.

"Medicare Advantage plans increasingly provide health assessments of their enrollees; for example, a nurse may come to a patient's home to do a physical exam," Park explained in a blog post.

But Medicare has found that "some insurers mainly use these assessments to 'collect' diagnoses in order to raise enrollees' risk scores for purposes of risk adjustment, rather than to improve follow-up care or identify illnesses requiring treatment," he wrote. "In fact, the Centers for Medicare and Medicaid Services had proposed excluding these kinds of assessments but dropped this change in the face of industry opposition."

MedPAC did suggest revising the prospective payment system for skilled nursing facilities, but no changes in the payment system for hospice care.

This article was originally published by MedPage Today.

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