Earlier we have discussed the recommendations of the Medicare Payment Advisory Commission (“MedPAC” or the “Commission”) with regard to fee-for-service (“FFS”) payment systems. Today’s post will discuss the Commission’s recommendations with regard to making FFS payments site-neutral, as well as its status reports on Medicare Advantage (“MA”) and the Medicare prescription drug program (“Part D”).

Similar Services in Different Settings

Inpatient and outpatient hospital rates for 2016 would receive an update of 3.25% per the Commission, provided that changes would be made to equalize payments for similar services provided in different care settings, making them site-neutral. Certain conditions treated both in skilled nursing facilities and in inpatient rehabilitation facilities would receive site-neutral payments, for example. Payments under the long-term care hospital payment system would also be reduced for patients who are not characterized as chronically critically ill, so that the payment rate would then be similar to what acute care hospitals receive.

Medicare Advantage

The Commission made some of the same recommendations in 2015 about MA as it did in March 2014, namely that hospice care should be integrated into the MA benefit package and bidding rules should be improved. According to MedPAC, Hospice inclusion in MA would increase coordination of care as well as innovation in end-of-life care, in addition to promoting accountability. The Commission also believes that employer group MA plans should be more consistent with comparable nonemployer plans in terms of payment, and the application of the national average bid-to-benchmark ratio for nonemployer plans to employer plans could achieve this goal. The Commission also recommended a decrease in benchmarks to equalize the payment system between MA and the FFS program enough to where neither is favored.

As for access to MA, MedPAC found that 99 percent of all Medicare beneficiaries have access to an MA plan. The report also found that data from a quality bonus program shows that plans are responding favorably to the measure by paying closer attention to quality measures that form the basis of these payments.

Medicare Part D

MedPAC made no recommendations as to Part D. It found high participation in the plan, with premiums remaining stable over the past year. The Commission did note an increase in spending between 2007 and 2013, which it attributed to two trends: (1) an overall shift towards the use of generic drugs, which affects the benefit spending that plan sponsors base premiums on, and (2) reinsurance payments have grown every year at an average rate of 16 percent.