MedPAC Releases 2019 Medicare Payment Recommendations

March 2019 ~

On March 15, the Medicare Payment Advisory Commission (MedPAC) released their annual Report to the Congress. The 2019 report includes analyses of payment adequacy and payment update recommendations for the fee-for-service, the Medicare Advantage (MA), and the Part D prescription drug programs.

MedPAC’s recommendations for the 2020 payment year in the report include:

Fee-For-Service Payment Update Recommendations

Hospitals: Inpatient and Outpatient Services

  • Replace Medicare’s current hospital quality programs with a new hospital value incentive program (HVIP) that:

o includes a small set of population-based outcomes, patient experience, and value measures;

o scores all hospitals based on the same absolute and prospectively set performance targets;

o accounts for differences in patients’ social risk factors by distributing payment adjustments through peer grouping, and

  • For 2020, update the 2019 base payment rates for acute care hospitals by 2 percent. The difference between the update recommendation and the amount specified in current law should be used to increase payments in a new HVIP.

Physicians and Other Health Professional Services

  • Increase the calendar year 2019 Medicare payment rates for physician and other health professional services by the amount specified in current law.

Ambulatory Surgical Center Services

  • Eliminate the calendar year 2020 update to the Medicare conversion factor for ambulatory surgical centers.
  • Require ambulatory surgical centers to report cost data.

Outpatient Dialysis Services

  • Update the CY 2019 Medicare e

Skilled Nursing Facility Services

  • Proceed to revise the skilled nursing facility prospective payment system in fiscal year 2020 and should annually recalibrate the relative weights of the case mix groups to maintain alignment of payments and costs.
  • Eliminate the fiscal year 2020 update to the Medicare base payment rates for skilled nursing facilities.

Home Health Agency Services

  • Reduce the calendar year 2019 Medicare base payment rate for home health agencies by 5 percent.

Inpatient Rehabilitation Facility Services

  • Reduce the fiscal year 2019 Medicare base payment rate for inpatient rehabilitation facilities by 5 percent.

Long-Term Care Hospital Services

  • Increase the fiscal year 2019 Medicare base payment rates for long-term care hospitals by 2 percent.

Hospice Services

  • Reduce the fiscal year 2019 Medicare base payment rates for hospice providers by 2 percent.

Redesigning Medicare’s Hospital Quality Programs

The Commission recommends the Congress replace the four current programs for measuring and rewarding hospital quality (the Hospital Inpatient Quality Reporting Program (IQRP), the Hospital Readmissions Reduction Program (HRRP), the Hospital Acquired Condition Reduction Program (HACRP), and the Hospital Value-Based Purchasing (VBP) Program) with the HVIP.

Status of the Medicare Advantage Program

According to the report, in 2019, access to MA plans remains high: 99 percent of Medicare beneficiaries have access to an MA plan. Nearly all Medicare beneficiaries (97 percent) have an HMO or a local preferred provider organization (PPO) plan operating in their county of residence. In 2019, 90 percent of Medicare beneficiaries have access to an MA plan that includes Part D drug coverage and charges no premium (beyond the Medicare Part B premium). The average beneficiary in 2019 has 23 available plans to choose from.

MedPAC states it has concerns with the Medicare Advantage star rating system, which is determined at the contractor level and serves as the basis for plan quality bonuses and public reporting of plan quality. MedPAC discussed using encounter data as the source of quality metrics in MA and moving to market areas as the reporting unit.

Status of the Medicare Prescription Drug Program (Part D)

According to the report, this year, beneficiaries continue to have a broad choice among plans, ranging from 22 to 30 prescription drug plans (PDPs) depending on where they live. The average beneficiary also has 23 MA plans available to them, most of which offer prescription drug coverage. In 2017, Medicare spending for Part D benefits totaled $93.9 billion. Enrollee premiums made up $14.0 billion of that total (enrollees also paid cost sharing)

The report states that while policymakers continue to work to offer plans new flexibilities to manage drug spending, implementing measures to “increase the financial risk that plans bear (such as those recommended by the Commission in 2016) are essential to ensure plans have incentives to use their new management tools to reduce spending growth for Medicare and its beneficiaries”.

Mandated Report: Opioids and Alternatives in Hospital Settings-Payments, Incentives, and Medicare Data

As stated in the report, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018 mandated that the Commission describes how Medicare pays for both opioid and non-opioid pain management treatments in hospital inpatient and outpatient settings, the existing incentives under the inpatient and outpatient prospective payment systems (the IPPS and OPPS, respectively) for prescribing opioids and non-opioids, and how opioid use is monitored through Medicare claims data.

For the report, MedPAC analyzed certain list prices for opioids and non-opioid alternatives commonly used in the hospital setting and found that both opioids and non-opioids are available at a range of prices, and there are expensive and inexpensive options for both. Thus, the Commission concludes that there is no clear indication that Medicare’s IPPS or OPPS discriminates against non-opioid medications.

In the 2019 report, MedPAC discusses three options for implementing a Part A and Part B opioid tracking program: (1) require prescription drug event-type reporting, (2) require hospitals to report all pain management drugs on Part A and Part B claims, and (3) link Part D opioid use to any prior hospital stays in which opioid use was initiated.


Source(s): MedPAC; ASCA Government Affairs Update March 21, 2019-Volume IX, Issue 11; Association of American Medical Colleges; Becker’s Hospital Review; McDermott Plus Consulting;