The Medicare Payment Advisory Commission identifies in its June report seven areas it believes are in need of policy change in order to "provide sufficient payment for efficient providers."
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Options for improving the federal risk adjustment formula to account for variations in patient severity and how patient medication adherence impacts federal healthcare spending are two of seven issues highlighted in the latest report from the Medicare Payment Advisory Commission.
MedPAC, an independent Congressional agency, is mandated by Congress to report on payment issues and make recommendations, and does so twice a year, with reports published in March and June. It issues these reports to air problems and discuss possible solutions or avenues of approach and whether they would accomplish the intended result.
In the latest report, released Friday, MedPAC identified seven areas in need of policy change in order to fairly adjust provider reimbursement:
1. Synchronizing Medicare policy across payment models
Medicare's three payment models—fee-for-service (FFS), Medicare Advantage (MA), and the accountable care organization (ACO)—each have inconsistent payment rules and incentives that warrant synchronization.
The commission also wants to involve the beneficiary in the equation. "We also need to consider what the payment models look like from the beneficiary's perspective," given the complexity of choosing between fee for service plans and MA plans.
"The commission recognizes that Medicare should make beneficiaries' decision making simpler and easier," MedPAC said. "Consistent presentation of information across channels may create choices that are easier to compare and could mitigate some of the costs in decision making."
2. Improving risk adjustment in the Medicare program
For Medicare Advantage plans, payment rates are based on a basic rate plus a demographic rate that factors in the patient's health costs. "However, it still substantially over-predicts the cost of the least costly beneficiaries and under-predicts the cost of the most costly beneficiaries," the report says.
These prediction errors are good for plans with low cost enrollees, but financially hurts plans with many high cost enrollees.
MedPAC analyzed three alternative approaches, each of which has problems in increasing precision for payments to these plans.
3. Measuring quality of care in Medicare
MedPAC is considering the concept of using population-wide outcome measures instead of, or in addition to, the currently used process measures whose scores result in payment incentives for fee for service, Medicare Advantage and ACO providers.
"A population-based-outcomes approach also could be useful for making payment adjustments within the MA and ACO models," the report says. "However, this approach may not be appropriate for adjusting FFS Medicare payments in an area because, unlike under an ACO or MA plan, the providers under FFS Medicare do not explicitly accept responsibility for the care of a population of beneficiaries.
The commission is also mulling the use of some measure of provider overuse in a formula for determining Medicare payment based on how often certain providers submit claims for clinical services deemed inappropriate.
That's because of the "potential for harm to beneficiaries and wasteful program spending" that can result.
4. Financial assistance for low-income beneficiaries
While low-income Medicare beneficiaries earning up to 150% of the federal poverty level can receive subsidies that help them purchase medications under Part D, many beneficiaries still can not afford out-of pocket costs for Part B.
That's why MedPAC recommends a redesign of the benefit package that would fully subsidize beneficiaries' Part B premiums "while still maintaining desirable incentives at the point at which services are provided" so that patients can make better decisions about their healthcare spending.
5. Paying for primary care using a per-beneficiary payment
MedPAC has long stated in previous reports that primary care providers should be paid more than they are now, in part because specialist practitioners who are paid based on procedures can make "more than double the average compensation for primary care practitioners.
Average compensation for a radiologist, for example, was $460,000 in one year while a primary care doctor's pay was $207,000, the report said.
"Such disparities in compensation could deter medical students from choosing primary care practice," the report said. The challenge is to find a better payment method, and, MedPAC says, that the "fee schedule is oriented toward discrete services and procedures that have a definite beginning and end" while primary care services are "oriented toward ongoing, non-face-to-face care coordination for a panel of patients."
One solution is a "per-beneficiary payment" rather than a per-office-visit payment.
6. Measuring the effects of medication adherence for the Medicare population.
While many research studies have found ways to improve medication adherence, "only a subset of these interventions elates better adherence to better health outcomes, patient satisfaction, and health care use and costs," the report said.
In this MedPAC analysis of medication adherence among patients with congestive heart failure, the report found that:
- Better adherence is associated with lower medical spending but effects vary by beneficiary characteristics, such as age.
- Beneficiaries who follow medication protocols were healthier before their diagnosis than non-adherent beneficiaries.
- The effects of medication adherence diminish over time.
7. Medicare payment differences across post-acute settings.
When Medicare beneficiaries receive the same service in two settings, an inpatient rehabilitation facility (IRF) versus a skilled nursing facility (SNF), those facilities are paid different rates under two separate payment systems.
While some differences should exist between an IRF and a SNF—because IRFs have more expensive staffing and supervision requirements—MedPAC questions "whether the program should pay for these differences when the patients admitted and the outcomes they achieve are similar."