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MedPAC Issues Report on Doctor Pay, Benefit Design

By Rebecca Adams, CQ HealthBeat Associate Editor

June 13, 2014 -- Congress should continue to pay extra to primary care physicians in the Medicare program and not allow bonuses to expire as scheduled next year, according to one option in a report recently released by the Medicare Payment and Advisory Commission (MedPAC).

The money might be more effective if it is provided through a monthly or annual payment for each Medicare beneficiary, the report suggested.

In 2008, MedPAC recommended that Congress give primary care doctors bonuses funded by a reduction in payments for specialty services. Lawmakers did approve bonus payments of 10 percent from 2011 through 2015 but did not include the MedPAC-recommended cuts for services other than primary care.

"The commission believes that the additional payments to primary care practitioners should continue," said the 177-page report. The idea is not a formal recommendation that commissioners approved, but rather an idea that the panel will continue to discuss.

"Replacing the primary care bonus payment with a per beneficiary payment could help move Medicare away from a [fee for service] volume-oriented approach and toward a beneficiary centered approach that encourages care coordination," including the communication with other medical providers and other activities that physicians would have to do to truly manage a patient's care as a team, according to the report.

The advisory commission's executive director Mark E. Miller will testify before the House Ways and Means Health Subcommittee on June 18 about the recommendations.

Lawmakers are interested in care coordination, as well as several other approaches covered in the MedPAC analysis. The commission's recommendations are non-binding, and Congress often doesn't act on changes suggested in the reports.

The report takes up the long-running question of adjusting the way Medicare benefits are designed, a topic of interest to Ways and Means Health Subcommittee Chairman Kevin Brady of Texas and others concerned that seniors get more protection against out-of-pocket costs when they need catastrophic care. That could mean beneficiaries will face higher upfront costs when they start using services.

MedPAC in 2012 recommended big changes to the design of the Medicare benefit so that patients would get a cap on their out-of-pocket costs, which would benefit sicker seniors. To balance out the burden, people in Medicare would pay a new fee on their Medigap supplemental plans.

That recommendation was designed to encourage seniors to use discretion when getting care and avoid overusing unneeded treatments. It would replace coinsurance with copayments, and give federal officials the ability to change or get rid of cost-sharing for high-value services. The goal was that seniors' overall cost-sharing expenses would not change.

The recommendation, again broached in the report released today, would help low-income beneficiaries who might put off care because of the cost of copayments. MedPAC has suggested that Medicare increase outpatient premium subsidies, which are currently given to people with income of up to 135 percent of the federal poverty level, so that they match the subsidies for prescription drugs, which go to people with income of up to 150 percent of poverty.

That would save more people about $1,300 a year in Part B premium costs, which they could use to pay other out-of-pocket costs.

"I am pleased that the commission continues to call attention to the need to improve Medicare's benefit design," said Brady in a statement about the upcoming hearing. "This commonsense step would modernize the Medicare benefit so it looks more like other health plans."

Another part of the report questions whether Medicare should be paying different for rehabilitation services depending on the setting where the care is delivered, even when patients' conditions and care is similar.

Inpatient rehabilitation facilities often are paid more than skilled nursing facilities for certain conditions. The commission looked closer at patients with different conditions—stroke, joint replacements,and hip and femur procedures—to determine whether needs were similar. The evidence was that people with orthopedic procedures were similar and that it may make sense to narrow the differences between the payments for the two types of facilities.

Since 2007, proposals that were put forward by both the Bush and Obama administrations suggested ways to reduce the price differential between inpatient rehab facilities and skilled nursing facilities for some conditions treated similarly. The commission is expected to continue examining the issue.

The report also is intended to spark a conversation about how to synchronize payment policies. Currently, private Medicare plans and networks of providers known as accountable care organizations are paid in different ways, even when they are in the same region. MedPAC is considering creating a common benchmark that would be tied to local fee-for-service spending for both the private Medicare Advantage plans and ACOs.

The debate will probably be a long-running discussion that won't be finalized by next year, but Brady applauded the panel for starting the conversation.

"I commend the commission for highlighting the need to compare fee-for-service to Medicare Advantage and other payment system options," he said. "We owe it to our seniors to provide an apples-to-apples comparison of quality and cost of these options in their geographic area."

Other issues in the report include:

  • Ways to improve the way that Medicare compensates health plans for providing care for sicker and more costly patients through risk adjustment payments.
  • Changes to Medicare quality measurements. The report said that Medicare quality metrics are too focused on process, and that there are too many of them.
  • The effect of drug adherence on health spending. The commission found that better adherence to a medication regimen that a doctor prescribes does lower health care spending—but that the effects vary by traits such as age and the effects are not as strong over time.

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