MACPAC Recommends Medicaid Policy Changes For Drug, Hospital Payments

June 2019 ~

The Medicaid and CHIP Payment and Access Commission (MACPAC) has released its 2019 Report to Congress on Medicaid and CHIP which includes recommendations Medicaid policy changes for outpatient prescription drug and hospital payments, and program integrity.

In the report issued on June 14, MACPAC called on Congress and the U.S. Department of Health and Human Services (HHS) to make changes to improve Medicaid policy affecting prescription drug and hospital payment, program integrity, and therapeutic foster care services for children and youth.

The report outlines issues affecting Medicare beneficiaries’ access to primary care, including Medicare payment strategies for Part B drugs, the Medicare Shared Savings Program (MSSP), and Medicare fee-for-service spending for emergency department (ED) services.

Part B Drugs Payment Strategies

Building on its recommendation from June 2017, MedPAC examined two strategies intended to improve price competition for Part B drugs. The commission did not make new recommendations on either of these strategies, but did include its pros and cons for each and considerations as to how to leverage these recommendations for Medicare Part B drugs.

  1. Reference Pricing would establish a reference payment amount for groups of drugs with similar health effects currently assigned to separate billing codes.
  2. Binding Arbitration would establish a system through which Medicare and manufacturers could set payment rates for drugs with limited competition under certain circumstances.

Medicare Shared Savings Program

Following an assessment of the MSSP’s effect on Medicare spending, the commission estimated savings from the program are modest and subject to variation based on how the analysis accounts for beneficiaries who “switch” in and out of accountable care organizations (ACOs).

The report also includes potential options for assigning beneficiaries to ACOs, including the risks of retrospective assignment and the role of annual wellness visits.

Medicare Advantage Quality Bonus Program

The commission also states in the report that the Medicare Advantage quality bonus program is flawed and inconsistent with its principles for quality measurement. The 2019 report outlines an option to replace the quality bonus program with a Medicare Advantage value incentive program. The Medicare Advantage value incentive program would be budget neutral and financed through withholding a small percentage of plan payments.

Fee-for-Service ED Spending

The commission presents trends in Medicare fee-for-service spending in hospital EDs, including non-urgent ED use, and potential changes to hospital ED coding. The commission recommends the Health and Human Services Secretary develop and implement a set of national guidelines for coding hospital ED visits under the Outpatient Prospective Payment System by 2022. According to the commission, this would more accurately reflect the resources hospitals incur when providing care in the ED setting and allow CMS to assess and audit hospitals’ coding behavior.

The report also includes MedPAC’s recommendation to eliminate “incident to” billing for advanced practice registered nurses and physician assistants and refining their specialty designations to give Medicare a fuller accounting of the services provided by these clinicians and to improve policymakers’ ability to target resources toward primary care.


Source(s): Medicaid and CHIP Payment and Access Commission; Becker’s Hospital Review; Essential Hospitals;