Category Archives: Medicare Payment Advisory Commission (MedPAC)

The Press Is Beginning to Take Notice of How Health Insurers Are Raiding The Medicare Trust Fund

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Sometimes a health policy story comes along that should be shouted from the rafters — well at least reported by media that cover the subject. Brett Arends’ story for Dow Jones’ MarketWatch is one of those stories. 

In “Medicare Advantage is overbilling Medicare by 22%,” Arends introduces readers to a government agency that in its latest report exposed Medicare Advantage plans to light.

The revelations about overpayments come from the Medicare Payment Advisory Commission, MedPAC for short, some of whose recommendations over the years have resulted in high rate increases for Advantage plan sellers that helped make it possible for them to offer groceries, bits of dental care, and other goodies seniors have snapped up. The media’s role in revealing and dissecting those overpayments is long overdue.

The last several months news outlets have been paying more attention to the downsides of Medicare Advantage plans.

Arends’ story focused on one thread in the story: MedPAC’s latest report to Congress that revealed something health policy wonks — but not the public — have known for a long time. Medicare Advantage plans are taking advantage of the federal gravy train.

“The private insurers who now run more than half of all Medicare plans are overcharging the taxpayers by a staggering $83 billion a year,” Arends wrote. “They are charging us taxpayers 22% more than it would cost us to provide the same health insurance to seniors directly if we just cut out the private insurance companies as middlemen.”

MedPAC was set up by the Balanced Budget Act of 1997, “back when people in Washington were actually doing their jobs,” Arends points out. The commission’s job is to advise Congress on issues involving Medicare. MedPAC reports discuss the financial situation of the Medicare trust funds, and over the years those reports often revealed that the private health plans have been overpaid. Until recently, there has been little to no pushback from the government or most of the media, in effect leaving the insurance industry a clear path to sell Medicare Advantage plans to more than half of the Medicare market. The media have recently begun to ask why. 

Arends calls the Medicare Advantage arrangement “a rip-off, pure and simple,” noting that what sellers of the plan are paid “is more than twice as much as it would cost simply to provide free dental, hearing and vision care to all traditional Medicare beneficiaries, not just those in private ‘Medicare Advantage’ plans.”

I have covered Medicare for decades now and have often asked the experts why there couldn’t be a level playing field that would allow beneficiaries in the traditional program to receive vision and dental benefits. The answer was always, “We can’t afford that.” 

Arends debunks that thinking by directly quoting the MedPAC report:

“It reads: ‘We estimate that Medicare spends approximately 22 percent more for MA enrollees than it would spend if those beneficiaries were enrolled in FFS (fee for service or traditional) Medicare, a difference that translates into a projected $83 billion in 2024.’ MedPAC reported that its review of private plan payments suggests that over the 39-year history with private plans, they “have never yielded aggregate savings for the Medicare program. Throughout the history of Medicare managed care, the program (Medicare Advantage) has paid more than it would have paid if beneficiaries had been in FFS (fee for service) Medicare.”

I checked in with Fred Schulte, who now writes for KFF Health News, and who over his career has written many prize-winning stories documenting the shenanigans insurers have used to enhance their reimbursements from Medicare, such as upcoding. That’s the practice of billing Medicare for ailments that are more serious than what patients actually have. “For example, instead of reporting a patient has diabetes, the insurers would say diabetes with neuropathy or eye problems and receive higher reimbursement,” he explained.

“It took a very long time for the government and the Justice Department to understand what was going on here with this coding,” Schulte said. “The codes just kept getting higher and higher, and profits kept going up and up.”

A year ago, Paul Ginsburg, a senior fellow at the University of Southern California’s Schaffer Center, said, “The current Medicare Advantage structure results in overpayments, markedly higher than previously understood.” 

Even Michael Chernow, who heads the Medicare Payment Advisory Commission authorized by Congress in 1997, recently admitted on Twitter that Medicare Advantage “has never saved Medicare money.” But he added, “that doesn’t mean Medicare Advantage isn’t a key pillar of Medicare sustainability. At its best it can provide better care at lower cost.” 

Arends’ story doesn’t sound hopeful about the direction of Medicare. He concludes, “Medicare Advantage isn’t making the rest of Medicare better. It is putting the rest of Medicare out of business. And not by being more efficient, but by being less efficient. It is driving up the overall cost of Medicare by 22%. And not by being more efficient but by being less efficient. 

The logical outcome is that traditional Medicare ceases to exist and that Medicare dollars pass through the hands of private insurance companies at 122 cents on the dollar.”

Arends’ prediction may well come true, but perhaps not without a fight. David Lipschutz, associate director at the Center for Medicare Advocacy, says a “confluence of factors have come together to make it harder to ignore the problems of Medicare Advantage by the press and policymakers.”

Where Does Medicare Go From Here: Profit-Driven Chaos or Patient-Centered Community?

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After covering the Medicare privatization crisis for over two years, an investigative reporter takes a step back and examines what’s at stake.

Medicare, the country’s largest and arguably most successful health care program, is under duress, weakened by decades of relentless efforts by insurance companies to privatize it.

A rapidly growing Medicare Advantage market — now 52% of Medicare beneficiaries, up from 37% in 2018 — controlled by some of the largest and most powerful corporations in the world, threatens to both drain the trust fund and eliminate Medicare’s most important and controversial component: its ability to set prices. 

It is not an overstatement to call it a heist of historic proportions, endangering the health not only of the more than 65 million seniors and people with disabilities who depend on Medicare but all Americans who benefit from the powerful role that Medicare has historically played in reining in health care costs.

The giant corporations that dominate Medicare Advantage have rigged the system to maximize payments from our government to the point that they are now being overpaid between $88 billion and $140 billion a year. The overpayments could soar to new heights if the insurers get their way and eliminate traditional Medicare.

All of America’s seniors and disabled people who depend on Medicare could soon be moved to a managed care model of ever-tightening networks, relentless prior authorization requirements and limited drug formularies. The promise of a humane health care system for all would be sacrificed at the altar of the almighty insurer dollar. 

The Medicare Payments Advisory Commission (MedPAC), the independent congressional agency tasked with overseeing Medicare, last month released a searing report which found that Medicare spends 22% more per beneficiary in Medicare Advantage plans than if those beneficiaries had been enrolled in traditional fee-for-service Medicare. That’s up from a 6% estimate in the prior year.  

A similar cost trend exists for diagnosis coding.

Medicare Advantage plans and their affiliated providers increasingly upcoded diagnoses to get higher reimbursements. In 2024, overpayments due to upcoding could total $50 billion, according to MedPAC, up from $23 billion in 2023. These enormous overpayments drive up the cost of premiums — MedPAC’s conservative estimate is that the premiums paid to Medicare out of seniors’ Social Security checks will be $13 billion higher in 2024 because of those overpayments. 

There is evidence that Americans and lawmakers are starting to wake up.

Medicare Advantage enrollment growth slowed considerably in 2023. Support within the Democratic Party for Medicare Advantage is cratering. In 2022, 147 House Democrats signed an industry-backed letter supporting Medicare Advantage. This year, just 24 House Democrats signed the letter. Earlier this month, the Biden administration cut Medicare Advantage base payments for the second year in a row (while still increasing payments overall), over the fierce opposition of the insurance lobby. The investment bank Stephens called Biden’s decision a “highly adverse” outcome for insurers. Wall Street has taken note, punishing the stock price of the largest Medicare Advantage insurers, with Barron’s noting that Wall Street’s “love affair” with Humana is “ending in tears.” The cargo ship is turning. It is up to us to determine if that will be enough. 

We can’t attack a problem if we don’t know how to diagnose it. I spoke with some of the most knowledgeable critics of Medicare Advantage about the danger the rapid expansion of Medicare privatization presents to the American public.

Rick Gilfillan is a medical doctor who in 2010 became the first director of the Center for Medicare and Medicaid Innovation (CMMI). He would go on to serve as CEO of Trinity Health from 2013 to 2019. In 2021 he launched an effort to halt the involuntary privatization of Medicare benefits. 

“Right now, all investigations are finding tremendous overpayments,” Gilfillan said. “The overpayments are based on medical diagnoses that may or may not be meaningful from a patient care standpoint. Insurers are using chart reviews, nurse home visits and AI software to find as many diagnoses as possible and thereby inflate the health risks of the patients and the premium they get from Medicare. The overpayments are just outrageous,” he said.

The problem could get worse if the Supreme Court curtails the powers of regulatory agencies, as it may do this year.  “It would make a huge difference in what CMS would be able to do,” Gilfillan said.

The logic behind Medicare privatization is that seniors and people with disabilities use too much care, egged on by their doctors. If true, a solution could have been to enforce the Stark Law, which bans physicians from having financial relationships with providers they refer to, or other anti-kickback statutes. States could also enforce laws 33 of them have enacted that prohibit the “corporate practice of medicine.” 

Instead, health insurers were invited and incentivized by previous administrations to compete with the original Medicare program and “manage” beneficiaries’ care. Under this model— set in its modern form in 2003 — Medicare Advantage insurers are paid a rate based on a complex risk modeling process and estimated costs.

But Medicare Advantage plans have never been cheaper than traditional Medicare, as MedPAC has repeatedly pointed out.  

This is a far more complex approach than the fee-for-service model in which CMS sets prices in health care in a public and transparent manner, Gilfillan notes. The prices negotiated by Medicare Advantage companies, by contrast, are not disclosed.

“With fee-for-service, a patient is provided a service, treatment or medication. The physician who provides the service charges a specific amount for that service,” Gilfillan said. “And then Medicare  pays whatever it decided it was worth for that service. The benefit is you pay for what you get.”

Some Medicare Advantage plans use a “capitated” approach in paying primary care physicians. The amount is based on the premium they receive for the patient. The more codes submitted, the higher the capitation, the greater the profit. That approach is having far-reaching economic impacts on health care, said Hayden Rooke-Ley, an Oregon-based lawyer and health care consultant who co-authored a recent New England Journal of Medicine article on the corporatization of primary care. It is the capitation model, he says, that drives the rampant upcoding among Medicare Advantage plans. 

From Horizontal to Vertical

“An undercovered aspect of Medicare Advantage is the way it is fueling vertical consolidation” in the insurance business, Rooke-Ley added, noting that until recent years, insurers bulked up by buying smaller competitors (known as horizontal integration). “With so much government money, we’re seeing insurance companies restructuring themselves as vertically integrated conglomerates [through the acquisition of physician practices, clinics and pharmacy operations] to become even more profitable, especially in Medicare Advantage.”

“A key part of this strategy is to own primary care practices,” he said, citing Humana’s partnership with the private-equity firm Welsh Carson to become the largest owner of Medicare-based primary care, CVS/Aetna’s acquisition of Oak Street, and UnitedHealth’s roll up of doctors practices across the country.

As Rooke-Ley explained, control of primary care allows insurance companies to more easily manipulate “risk scores” to increase payments from the government by claiming patients are in worse health than they really are.

“The easiest way to increase risk scores, short of simply fabricating diagnosis codes, is to control the behavior of physicians and other clinicians,” he said. 

“When an insurance company owns the physician practice, it can configure workflows, technology, and incentives to drive risk coding.

UnitedHealth, for example, can preferentially schedule Medicare Advantage patients – and it can choose to reach out to health plan enrollees it identifies with its data as having high ‘coding opportunities.’ It can require its doctors to go to risk-code training, and it can prohibit doctors from closing their notes before they address all the ‘suggested’ diagnosis codes.” 

“While Medicare Advantage insurance companies tout all their provider acquisitions as investments in value-based care, the concern is that it’s really just looking like a game of financialization,” Rooke-Ley said. “MA was supposed to save Medicare money, but the exact opposite has happened.

According to MedPAC, the government will over-subsidize MA to the tune of $88 billion this year, with $54 billion of that due to excess risk coding relative to what we see in traditional Medicare. That’s a staggering amount of money that could go directly to patients and clinicians by strengthening traditional Medicare.”   

Two Possible Futures

There are two options for the future of Medicare, said Dr. Ed Weisbart, former chief medical officer of the pharmacy benefit manager Express Scripts, which Cigna bought in 2018, who now leads the Missouri chapter of Physicians for a National Health Program.

In one future, he said, “We will change the trajectory and get rid of the profiteers, and manage to divert the funds that are being profiteered to patient care.”

In another future, the business practices of Medicare Advantage plans “will be unfettered and more damaging and harmful than they are today,” he said. “If we continue on this course we’ll find an increasingly polarized health care system that caters increasingly to the wealthy and privileged. The barriers to care will be worse.” 

Medicare finalizes physician pay cuts as Congress considers stepping in

Posted on by • Posted in American Medical Association (AMA), Center for Medicare and Medicaid Services (CMS), Medicare Payment Advisory Commission (MedPAC), Medicare Reimbursement, Physician Compensation, Physician Fee Schedule, Primary Care • Leave a comment

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Last week, the Centers for Medicare and Medicaid Services (CMS) issued the final 2024 Physician Fee Schedule, which reduces overall payment rates for physicians by 1.25 percent, including a 3.4 percent decrease in the conversion factor for relative value units, compared to 2023. 

The rule also implements a new add-on payment for complex evaluation and management visits, which is expected to boost pay for primary care physicians.

The American Medical Association (AMA) strongly opposes these cuts and immediately appealed to Congress for a reprieve. In response, the Senate Finance Committee unanimously advanced a bill to the Senate floor that would reduce the conversion-factor rate cut from 3.4 percent to 2.15 percent, while also delaying reductions in Medicaid disproportionate share funding for safety-net hospitals. Senate Majority Leader Chuck Schumer (D-NY) has indicated he intends to assemble a broad healthcare bill, including some or all of these provisions, by the end of this year. 

The Gist: Physicians were hopeful that inflation’s toll on labor and supply costs would earn them a break from continued Medicare pay cuts, but CMS remains committed to reductions within its budget neutrality framework.

Earlier this year, the Medicare Payment Advisory Commission (MedPAC) recommended for the first time that physician payments be tied to an index of physician practice inflation, but that would require legislative intervention, which Congress has not taken up. 

The AMA calculated that Medicare physician pay has lagged inflation by 26 percent since 2001, pointing to burnout and large numbers of physicians exiting the profession as a result. 

Until calls for Medicare payment reform are heeded, physicians, like health systems, will have to adopt new, lower-cost models of care to cope with what they will continue to see as insufficient reimbursements.

Physicians beyond ‘breaking point’ want Medicare pay reform

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Physicians at the American Medical Association Annual Meeting called for an overhaul of the Medicare payment system, arguing that it is outdated and threatens the survival of independent practices and patients’ access to care.

“This cannot wait; we are past the breaking point. Congress must urgently address physician concerns about Medicare to account for inflation and the post-pandemic economic reality facing practices nationwide,” AMA President Jack Resneck Jr., MD, said in a June 12 news release. “Our patients are counting on us to deliver the message that access to health care is jeopardized by Medicare’s payment system. Being mad isn’t enough. We will develop a campaign — targeted and grass roots — that will drive home our message.”

Inflation, the pandemic, declining reimbursements and rising cost are making it more challenging for independent physicians to maintain their autonomy and are jeopardizing access to care, according to the AMA, which argues that CMS physician payments have declined 26 percent from 2001 to 2023 after accounting for inflation.

In January, the Medicare Payment Advisory Commission called for a physician payment update tied to the Medicare Economic Index for the first time, and, in April, a group of House members introduced a bill that would provide annual inflation updates to the Medicare fee schedule based on the index.

“Duct-taping the widening cracks of a dilapidated payment system has put us in this precarious situation,” Dr. Resneck said. “Physicians are united in our determination to build a solid foundation rather than further jury-rigging the system.”

MedPAC recommendations on 2024 payment rates get mixed reaction

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Health System, Hospital, Hospital Industry, Long Term Care Hospital, Medicare, Medicare Advantage, Medicare Disproportionate Share Reimbursement, Medicare Fee Schedule, Medicare Part D, Medicare Payment Advisory Commission (MedPAC), MedPAC, Physician, Physician Reimbursement • Leave a comment

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The Medicare Advisory Payment Commission recommends a higher-than-current-law fee-for-service payment update in 2024 for acute care hospitals and positive payment updates for clinicians paid under the physician fee schedule. It recommends reductions in base payment rates for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

MedPAC gave Congress recommendations on payment rates in both traditional fee-for-service and Medicare Advantage for 2024, satisfying a legislative mandate comparing per enrollee spending in both programs.

MedPAC estimates that Medicare spends 6% more for MA enrollees than it would spend if those enrollees remained in fee-for-service Medicare.

In their March 2023 Report to the Congress: Medicare Payment Policy, commissioners said they were acutely aware of how providers’ financial status and patterns of Medicare spending varied in 2020 and 2021 due to COVID-19 and were also aware of higher and more volatile cost increases.

However, they’re statutorily charged to evaluate available data to assess whether Medicare payments are sufficient to support the efficient delivery of care and ensure access to care for Medicare’s beneficiaries, commissioners said. 

FEE-FOR-SERVICE RATE RECOMMENDATIONS 

MedPAC’s payment update recommendations are based on an assessment of payment adequacy, beneficiaries’ access to and use of care, the quality of the care, the supply of providers, and their access to capital, the report said. As well as higher payments for acute care hospitals and clinicians, MedPAC recommends positive rates for outpatient dialysis facilities.

It recommends providing additional resources to acute care hospitals and clinicians who furnish care to Medicare beneficiaries with low incomes. It also recommends a positive payment update in 2024 for hospice providers concurrent with wage adjusting and reducing the hospice aggregate Medicare payment cap by 20%.

It recommends negative updates, which are reductions in base payment rates, for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

Acute care

For acute care hospitals paid under the inpatient prospective payment system, commissioners recommend adding $2 billion to current disproportionate share and uncompensated care payments and distributing the entire amount using a commission-developed “Medicare SafetyNet Index” to direct funding to those hospitals that provide care to large shares of low-income Medicare beneficiaries.

This recommendation got pushback from America’s Essential Hospitals.

“We appreciate the Medicare Payment Advisory Commission’s desire to define safety net hospitals for targeted support, but the commission’s Medicare safety net index (MSNI) could have the perverse effect of shifting resources away from hospitals that need support the most,” said SVP of Policy and Advocacy Beth Feldpush. “The MSNI methodology fails to account for all the nation’s safety net hospitals by overlooking uncompensated care and care provided to non-Medicare, low-income patients – especially Medicaid beneficiaries. Any practical definition of a safety net provider must consider the care of Medicaid and uninsured patients, yet the MSNI misses on both counts.”

Feldpush urged policymakers to develop a federal designation of safety net hospitals and to reject the MSNI.

“Further, policymaking for these hospitals should supplement, rather than redistribute, existing Medicare DSH funding, which reflects a congressionally sanctioned, well-established methodology,” she said.

Physicians and clinicians

For clinicians, the commission recommends that Medicare make targeted add-on payments of 15% to primary care clinicians and 5% to all other clinicians for physician fee schedule services provided to low-income Medicare beneficiaries. 

The American Medical Association commended MedPAC, but also said that an update tied to just 50% of the Medicare Economic Index would cause physician payment to chronically fall even further behind increases in the cost of providing care. AMA president Dr. Jack Resneck Jr. urged Congress to pass legislation providing for an annual inflation-based payment update.

MedPAC has long championed a physician payment update tied to the Medicare Economic Index, Resneck said. Physicians have faced the cost of inflation, the COVID-19 pandemic and growing expenses to run medical practices, jeopardizing access to care, particularly in rural and underserved areas.

“Not only have Medicare payments failed to respond adequately, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment,” Resneck said. “As one of the only Medicare providers without an inflationary payment update, physicians have waited a long time for this change. When adjusted for inflation, Medicare physician payment has effectively declined 26% from 2001 to 2023. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities. Our workforce is at risk just when the health of the nation depends on preserving access to care.”

The AMA and 134 other health organizations wrote to congressional leaders urging for a full inflation-based update to the Medicare Physician Fee Schedule.

MGMA’s SVP of Government Affairs Anders Gilberg said, “Today’s MedPAC report recommends Congress provide an inflationary update to the Medicare base payment rate for physician and other health professional services of 50% of the Medicare Economic Index (MEI), an estimated annual increase of 1.45% for 2024. In the best of times such a nominal increase would not cover annual medical practice cost increases. In the current inflationary environment, it is grossly insufficient.”

MGMA urged Congress to pass legislation to provide an annual inflationary update based on the full MEI.

Ambulatory surgical centers and long-term care hospitals

Previously, the commission considered an annual update recommendation for ambulatory surgical centers (ASCs). However, because Medicare does not require ASCs to submit data on the cost of treating beneficiaries, the commissioners said they had no new significant data to inform an ASC update recommendation for 2024.

Commissioners also previously considered an annual update recommendation for long-term care hospitals (LTCHs). But as the number of cases that qualify for payment under Medicare’s prospective payment system for LTCHs has fallen, they said they have become increasingly concerned about small sample sizes in the analyses of this sector.

“As a result, we will no longer provide an annual payment adequacy analysis for LTCHs but will continue to monitor that sector and provide periodic status reports,” they said in the report. 

MEDICARE ADVANTAGE

Commissioners said that overall, indicators point to an increasingly robust MA program. In 2022, the MA program included over 5,200 plan options, enrolled about 29 million Medicare beneficiaries (49% of eligible beneficiaries), and paid MA plans $403 billion (not including Part D drug plan payments). 

In 2023, the average Medicare beneficiary has a choice of 41 plans offered by an average of eight organizations. Further, the level of rebates that fund extra benefits reached a record high of about $2,350 per enrollee, on average.

Medicare payments for these extra benefits – which are not covered for beneficiaries in FFS – have more than doubled since 2018. For 2023, the average MA plan bid to provide Medicare Part A and Part B benefits was 17% less than FFS Medicare would be projected to spend for those enrollees. 

However, the benefits from MA’s lower cost relative to FFS spending are shared exclusively by the companies sponsoring MA plans and MA enrollees (in the form of extra benefits). The taxpayers and FFS Medicare beneficiaries (who help fund the MA program through Part B premiums) do not realize any savings from MA plan efficiencies. 

Medicare should not continue to overpay MA plans, MedPAC said. Over the past few years, the commission has made recommendations to address coding intensity, replace the quality bonus program and establish more equitable benchmarks, which are used to set plan payments, the report said. All of these would stem Medicare’s excess payments to MA plans, helping to preserve Medicare’s solvency and sustainability while maintaining beneficiary access to MA plans and the extra benefits they can provide. 

PART D

Medicare’s cost-based reinsurance continues to be the largest and fastest growing component of Part D spending, totaling $52.4 billion, or about 55% of the total, according to the report. 

As a result, the financial risk that plans bear, as well as their incentives to control costs, has declined markedly. The value of the average basic benefit that is paid to plans through the capitated direct subsidy has plummeted in recent years. 

In 2023, direct subsidy payments averaged less than $2 per member per month, compared with payments of nearly $94 per member, per month, for reinsurance. To help address these issues, in 2020 the commission recommended substantial changes to Part D’s benefit design to limit enrollee out-of-pocket spending; realign plan and manufacturer incentives to help restore the role of risk-based, capitated payments; and eliminate features of the current program that distort market incentives.

In 2022, Congress passed the Inflation Reduction Act, which included numerous policies related to prescription drugs. One such provision is a redesign of the Part D benefit with many similarities to the commission’s recommended changes. 

The changes adopted in the IRA will be implemented over the next several years, and are likely to alter the drug-pricing landscape, commissioners said.

MedPAC declines to recommend to Congress additional pay bumps for doctors, hospitals

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health Policy, Health System, Hospital, Hospital Industry, Medical Group, Medical Group Management Association (MGMA), Medicare Payment Advisory Commission (MedPAC), Physician, Physician Practice Management, Rev Cycle Management • Leave a comment
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Medicare spending costs money

A top Medicare advisory board did not recommend any new payment hikes for acute care hospitals or doctors for 2023, stating that targeted relief funding has helped blunt the impact of the COVID-19 pandemic.

The Medicare Payment Advisory Commission (MedPAC), which makes recommendations to Congress and the federal government on Medicare issues, voted on the payment changes to Congress during its Thursday meeting. The panel decided against recommending any pay hikes.

The commission unanimously voted to update 2023 rates for acute care hospitals by the amounts determined under current law. The Centers for Medicare & Medicaid Services will publish its update to the current law payment rates this summer.

MedPAC estimated that the rates will increase 2% and that there would be 3.1% growth in hospital wages and benefits, but these “may be higher or lower by the time this is finalized,” said MedPAC staff member Alison Binkowski.

She added there will be another estimated 0.5% increase in inpatient rates.

MedPAC decided not to recommend any pay rates beyond current law after looking at the financial picture for hospitals and found the indicators of payment adequacy are generally positive.

“Hospitals maintained strong access to capital thanks to substantial federal support, including targeted federal relief funds to rural hospitals which raised their all-payer total margin to a near-record total high,” Binkowski said.

She added fewer hospitals closed, and facilities continued to have positive marginal Medicare profits.

It was also difficult to interpret changes in quality that traditionally would determine whether a payment boost would be needed.

“For example, mortality rates increased in 2020, but this reflects the tragic effects of the pandemic on the elderly rather than a change in the quality of care provided to Medicare beneficiaries or the adequacy of Medicare payments,” Binkowski said.

Even though commission members agreed with the recommendation for hospitals, they were concerned whether it was enough to help facilities meet drastic increases in labor expenses.

“With labor, it is more than just a salary increase these hospitals are seeing,” said commission member Brian DeBusk.

He noted that hospitals haven’t just seen an increase in rates for contract or temporary nurses, but in nursing education as well.

MedPAC also recommended no changes to the statutory payment update for dialysis facilities and shouldn’t give a payment update to ambulatory surgery centers (ASCs) due to confidence in payment adequacy for the facilities.

“Despite the public health emergency, the number of ASCs increased by 2% in 2020,” said MedPAC staff member Daniel Zabinski. “The growth that we saw in the number of ASCs also suggests access to capital remains adequate.”

Physician fee schedule recommendation

The commission decided to take a similar estimate with the physician fee schedule, calling for any update to be tied to current law, which is estimated to have no change in spending.

Medicare payments to clinicians declined by $9 billion in 2020 but were offset thanks to congressional relief funds. Physicians also got a 4% bump to payments through 2022 compared to prior law.

The temporary rate hike is expected to go away at the start of 2023, but physician groups are likely to lobby Congress to keep the pay bump intact.

Physician groups already blasted the recommendation from MedPAC.

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, tweeted that the recommendation was out of touch, especially after new reports of inflation.

“Hard to conceive of a more misguided recommendation to Congress at a time when practices face massive staffing shortages and skyrocketing expenses,” he tweeted.

Medicare, Medicare Advantage enrollees have comparable healthcare experiences

Posted on by • Posted in Health Policy, Market Share, Market Trends, Medicare, Medicare Advantage, Medicare Part D, Medicare Payment Advisory Commission (MedPAC), Out of Pocket Expenses • Leave a comment

https://www.healthcarefinancenews.com/news/medicare-medicare-advantage-enrollees-have-comparable-healthcare-experiences

Enrollment in Medicare Advantage plans is increasing rapidly, and many insurers are expanding their MA offerings in a bid to grab larger portions of the market share. Medicare Advantage touts itself as having certain advantages over traditional Medicare, such as fitness benefits, coverage for hearing aids and eyeglasses, and limits on out-of-pocket spending.

This begs the question: Are enrollees in the two versions of Medicare fundamentally different, and what are their experiences like in terms of satisfaction?

New analysis from the Commonwealth Fund found that Medicare Advantage enrollees do not differ significantly from beneficiaries in traditional Medicare in terms of their age, race, income, chronic conditions, satisfaction with care, or access to care, after excluding Special Needs Plan (SNP) enrollees. 

Both groups reported waiting more than a month for physician office visits, while similar shares of Medicare Advantage and traditional Medicare enrollees report that their out-of-pocket costs make it difficult to obtain care.

Ultimately, MA and traditional Medicare are serving similar populations, with beneficiaries having comparable healthcare experiences. The care management services provided by Medicare Advantage plans appear to neither impede access to care nor reduce concerns about costs.

WHAT’S THE IMPACT?

Beneficiaries weigh a number of trade-offs when deciding whether to enroll in Medicare Advantage plans or traditional Medicare. Unlike the latter, MA plans are required to place limits on enrollees’ out-of-pocket spending and to maintain provider networks. The plans also can provide benefits not covered by traditional Medicare, such as eyeglasses, fitness benefits and hearing aids. 

Medicare Advantage plans are intended to manage and coordinate beneficiaries’ care. Some MA plans specialize in care for people with diabetes and other common chronic conditions, including Special Needs Plans. SNPs also focus on people who are eligible for both Medicare and Medicaid and on those who require an institutional level of care.

Traditional Medicare and MA enrollees have historically had different characteristics, with MA enrollees somewhat healthier. Black and Hispanic beneficiaries and those with lower incomes have tended to enroll in MA plans at higher rates than others, while traditional Medicare has historically performed better on beneficiary-reported metrics, such as provider access, ease of getting needed care, and overall care experience.

The Commonwealth Fund found that, after excluding beneficiaries in SNPs, beneficiaries enrolled in traditional Medicare do not differ significantly from MA enrollees on age, income, or receipt of a Part D low-income subsidy (LIS), which helps low-income individuals pay for prescription drugs. But beneficiaries in traditional Medicare are significantly more likely than MA enrollees to reside in a metropolitan area and more likely to live in a long-term-care or residential facility.

Beneficiaries in SNPs are different. Given the eligibility criteria for these plans, it’s not surprising that enrollees tend to have significantly lower incomes and a greater likelihood of receiving Medicaid benefits or LIS than other Medicare beneficiaries. 

Enrollment in SNPs for people who require an institutional level of care has been growing rapidly, leading to a similar share of SNP enrollees and beneficiaries in traditional Medicare living in a long-term-care facility.

There are some areas in which Medicare Advantage plans appear to perform better than traditional Medicare. In particular, MA enrollees are more likely than those in traditional Medicare to have a treatment plan, to have someone who reviews their prescriptions, to have someone they can contact for help, and to receive a response to a health query relatively quickly. 

By providing this additional help, Medicare Advantage plans are making it easier for enrollees to get the help they need to manage their healthcare conditions, the report found. Medicare experts have suggested providing a similar service to beneficiaries in traditional Medicare through care coordinators.

The results also raise questions about whether Medicare Advantage plans are receiving appropriate payments. MedPAC estimates that plans are paid 4% more than it would cost to cover similar people in traditional Medicare. 

On the one hand, Medicare Advantage plans seem to be providing services that help their enrollees manage their care, and this added care management could be of significant value to both plan enrollees and the Medicare program. On the other hand, rates of hospitalizations and emergency room visits are similar for beneficiaries in Medicare Advantage plans and traditional Medicare. This calls into question the impact of the added services on healthcare use, spending and outcomes.

THE LARGER TREND

Insurers are expanding their Medicare Advantage offerings at a decent clip, with Humana announcing last week it would debut a new Medicare Advantage PPO plan in 37 rural counties in North Carolina in response to market demand in the eastern part of the state.

Just last week, UnitedHealthcare, which already has significant market control with its MA plans, said it will strengthen its foothold in the space by expanding its MA plans in 2022, adding a potential 3.1 million members and reaching 94% of Medicare-eligible consumers in the U.S.

And for the third straight year, health insurer Cigna is expanding its Medicare Advantage plans, growing into 108 new counties and three new states – Connecticut, Oregon and Washington – which will increase its geographic presence by nearly 30%.

Centene is also getting in on the act, expanding MA into 327 new counties and three new states: Massachusetts, Nebraska and Oklahoma. In all, this represents a 26% expansion of Centene’s MA footprint, with the offering available to a potential 48 million beneficiaries across 36 states.

The Centers for Medicare and Medicaid Services said in late September that the average premium for Medicare Advantage plans will be lower in 2022 at $19 per month, compared with $21.22 in 2021. However, Part D coverage is rising to $33 per month, compared with $31.47 in 2021.

Enrollment in MA continues to increase, CMS said. In 2022, it’s projected to reach 29.5 million people, compared with 26.9 million enrolled in a Medicare Advantage plan in 2021.

MedPAC calls for 2% bump to hospital payments, no update for docs in 2022

Posted on by • Posted in Ambulatory Care Services, Ambulatory Surgery Centers (ASC), Health Policy, Health System, Home Health, Hospice, Hospital, Hospital Industry, Inpatient Care, Medicare, Medicare Payment, Medicare Payment Advisory Commission (MedPAC), Nursing Home, Outpatient Care, Outpatient Dialysis, Outpatient Surgery, Physician, Telemedicine • Leave a comment
https://www.fiercehealthcare.com/payer/medpac-calls-for-2-bump-to-hospital-payments-no-update-for-docs-2022?mkt_tok=Mjk0LU1RRi0wNTYAAAF730i1igcSb0kCs7xE_tFtcaVLeAgvSuKaO97bzGghRJUy_7N85je81egmTwu-AhQz-gRWcBP8OLp64qUIQktKRQI8AHqzZ2I8P8LAQU673FocNMk&mrkid=959610
MedPAC March 2019 Report to the Congress Released - ehospice

A key Medicare advisory panel is calling for a 2% bump to Medicare payments for acute care hospitals for 2022 but no hike for physicians.

The report, released Monday from the Medicare Payment Advisory Commission (MedPAC)—which recommends payment policies to Congress—bases payment rate recommendations on data from 2019. However, the commission did factor in the pandemic when evaluating the payment rates and other policies in the report to Congress, including whether policies should be permanent or temporary.

“The financial stress on providers is unpredictable, although it has been alleviated to some extent by government assistance and rebounding service utilization levels,” the report said.

MedPAC recommended that targeted and temporary funding policies are the best way to help providers rather than a permanent hike for payments that gets increased over time.

“Overall, these recommendations would reduce Medicare spending while preserving beneficiaries’ access to high-quality care,” the report added.

MedPAC expects the effects of the pandemic, which have hurt provider finances due to a drop in healthcare use, to persist into 2021 but to be temporary.

It calls for a 2% update for inpatient and outpatient services for 2022, the same increase it recommended for 2021.

The latest report recommends no update for physicians and other professionals. The panel also does not want any hikes for four payment systems: ambulatory surgical centers, outpatient dialysis facilities, skilled nursing facilities and hospices.

MedPAC also recommends Congress reduce the aggregate hospice cap by 20% and that “ambulatory surgery centers be required to report cost data to [Centers for Medicare & Medicaid Services (CMS)],” the report said.

But it does call for long-term care hospitals to get a 2% increase and to reduce payments by 5% for home health and inpatient rehabilitation facilities.

The panel also explores the effects of any policies implemented under the COVID-19 public health emergency, which is likely to extend through 2021 and could continue into 2022.

For instance, CMS used the public health emergency to greatly expand the flexibility for providers to be reimbursed for telehealth services. Use of telehealth exploded during the pandemic after hesitancy among patients to go to the doctor’s office or hospital for care.

“Without legislative action, many of the changes will expire at the end of the [public health emergency],” the report said.

MedPAC recommends Congress temporarily continue some of the telehealth expansions for one to two years after the public health emergency ends. This will give lawmakers more time to gather evidence on the impact of telehealth on quality and Medicare spending.

“During this limited period, Medicare should temporarily pay for specified telehealth services provided to all beneficiaries regardless of their location, and it should continue to cover certain newly-covered telehealth services and certain audio-only telehealth services if there is potential for clinical benefit,” according to a release on the report.

After the public health emergency ends, Medicare should also return to paying the physician fee schedule’s facility rate for any telehealth services. This will ensure Medicare can collect data on the cost for providing the services.

“Providers should not be allowed to reduce or waive beneficiary cost-sharing for telehealth services after the [public health emergency],” the report said. “CMS should also implement other safeguards to protect the Medicare program and its beneficiaries from unnecessary spending and potential fraud related to telehealth.”

Medicare Cuts Payment to 774 Hospitals Over Patient Complications

Posted on by • Posted in ACA, Health Policy, Health System, Hospital, Hospital Acquired Infections, Hospital Industry, Medicare, Medicare Payment, Medicare Payment Advisory Commission (MedPAC), Quality of Care, Readmission • Leave a comment
https://khn.org/news/article/medicare-cuts-payment-to-774-hospitals-over-patient-complications/
A man in a hospital gown sits on a hospital bed

The federal government has penalized 774 hospitals for having the highest rates of patient infections or other potentially avoidable medical complications. Those hospitals, which include some of the nation’s marquee medical centers, will lose 1% of their Medicare payments over 12 months.

The penalties, based on patients who stayed in the hospitals anytime between mid-2017 and 2019, before the pandemic, are not related to covid-19. They were levied under a program created by the Affordable Care Act that uses the threat of losing Medicare money to motivate hospitals to protect patients from harm.

On any given day, one in every 31 hospital patients has an infection that was contracted during their stay, according to the Centers for Disease Control and Prevention. Infections and other complications can prolong hospital stays, complicate treatments and, in the worst instances, kill patients.

“Although significant progress has been made in preventing some healthcare-associated infection types, there is much more work to be done,” the CDC says.

Now in its seventh year, the Hospital-Acquired Condition Reduction Program has been greeted with disapproval and resignation by hospitals, which argue that penalties are meted out arbitrarily. Under the law, Medicare each year must punish the quarter of general care hospitals with the highest rates of patient safety issues. The government assesses the rates of infections, blood clots, sepsis cases, bedsores, hip fractures and other complications that occur in hospitals and might have been prevented. The total penalty amount is based on how much Medicare pays each hospital during the federal fiscal year — from last October through September.

Hospitals can be punished even if they have improved over past years — and some have. At times, the difference in infection and complication rates between the hospitals that get punished and those that escape punishment is negligible, but the requirement to penalize one-quarter of hospitals is unbending under the law. Akin Demehin, director of policy at the American Hospital Association, said the penalties were “a game of chance” based on “badly flawed” measures.

Some hospitals insist they received penalties because they were more thorough than others in finding and reporting infections and other complications to the federal Centers for Medicare & Medicaid Services and the CDC.

“The all-or-none penalty is unlike any other in Medicare’s programs,” said Dr. Karl Bilimoria, vice president for quality at Northwestern Medicine, whose flagship Northwestern Memorial Hospital in Chicago was penalized this year. He said Northwestern takes the penalty seriously because of the amount of money at stake, “but, at the same time, we know that we will have some trouble with some of the measures because we do a really good job identifying” complications.

Other renowned hospitals penalized this year include Ronald Reagan UCLA Medical Center and Cedars-Sinai Medical Center in Los Angeles; UCSF Medical Center in San Francisco; Beth Israel Deaconess Medical Center and Tufts Medical Center in Boston; NewYork-Presbyterian Hospital in New York; UPMC Presbyterian Shadyside in Pittsburgh; and Vanderbilt University Medical Center in Nashville, Tennessee.

There were 2,430 hospitals not penalized because their patient complication rates were not among the top quarter. An additional 2,057 hospitals were automatically excluded from the program, either because they solely served children, veterans or psychiatric patients, or because they have special status as a “critical access hospital” for lack of nearby alternatives for people needing inpatient care.

The penalties were not distributed evenly across states, according to a KHN analysis of Medicare data that included all categories of hospitals. Half of Rhode Island’s hospitals were penalized, as were 30% of Nevada’s.

All of Delaware’s hospitals escaped punishment. Medicare excludes all Maryland hospitals from the program because it pays them through a different arrangement than in other states.

Over the course of the program, 1,978 hospitals have been penalized at least once, KHN’s analysis found. Of those, 1,360 hospitals have been punished multiple times and 77 hospitals have been penalized in all seven years, including UPMC Presbyterian Shadyside.

The Medicare Payment Advisory Commission, which reports to Congress, said in a 2019 report that “it is important to drive quality improvement by tying infection rates to payment.” But the commission criticized the program’s use of a “tournament” model comparing hospitals to one another. Instead, it recommended fixed targets that let hospitals know what is expected of them and that don’t artificially limit how many hospitals can succeed.

Although federal officials have altered other ACA-created penalty programs in response to hospital complaints and independent critiques — such as one focused on patient readmissions — they have not made substantial changes to this program because the key elements are embedded in the statute and would require a change by Congress.

Boston’s Beth Israel Deaconess said in a statement that “we employ a broad range of patient care quality efforts and use reports such as those from the Centers for Medicare & Medicaid Services to identify and address opportunities for improvement.”

UCSF Health said its hospital has made “significant improvements” since the period Medicare measured in assessing the penalty.

“UCSF Health believes that many of the measures listed in the report are meaningful to patients, and are also valid standards for health systems to improve upon,” the hospital-health system said in a statement to KHN. “Some of the categories, however, are not risk-adjusted, which results in misleading and inaccurate comparisons.”

Cedars-Sinai said the penalty program disproportionally punishes academic medical centers due to the “high acuity and complexity” of their patients, details that aren’t captured in the Medicare billing data.

“These claims data were not designed for this purpose and are typically not specific enough to reflect the nuances of complex clinical care,” the hospital said. “Cedars-Sinai continually tracks and monitors rates of complications and infections, and updates processes to improve the care we deliver to our patients.”

‘Really difficult nut to crack’: MedPAC torn over telehealth regs post-COVID-19

Posted on by • Posted in Access, Access & Quality of Healthcare, Competition, Health Policy, Innovation, Medicare, Medicare Payment Advisory Commission (MedPAC), Pandemic, Physician, Physician Practice Management, Telemedicine, Telemedicine Reimbursement, Virtual Care Strategy, Virtual Healthcare, Virtual Visit, Vulnerable Populations • Leave a comment

https://www.healthcaredive.com/news/really-difficult-nut-to-crack-medpac-torn-over-telehealth-regs-post-covi/593466/

Dive Brief:

  • Members of an influential congressional advisory committee on Medicare are torn on how best to regulate telehealth after the COVID-19 public health emergency, hinting at the difficulty Washington faces as it looks to impose guardrails on virtual care without restricting its use after the pandemic ends.
  • During a Thursday virtual meeting, the Medicare Payment Advisory Commission expressed its support of telehealth broadly, but many members noted snowballing use of the new modality could create more fraud and abuse in the system down the line.
  • Key questions of how much Medicare reimburses for telehealth visits and what type of visits are paid for won’t be easily answered, MedPAC commissioners noted. “This is a really, really difficult nut to crack,” Michael Chernew, MedPAC chairman and a healthcare policy professor at Harvard Medical School, said.

Dive Insight:

Virtual care has kept much of the industry running during the coronavirus pandemic, allowing patients to receive needed care at home. Much of this was possible due to the declaration of a public health emergency early 2020, allowing Medicare to reimburse for a greater swath of telehealth services and nixing other restrictions on virtual care.

However, much of that freedom is only in place for the duration of the public health emergency, leaving regulators and legislators scrambling to figure which new flexibilities they should codify, and which perhaps are best left in the past along with COVID-19.

It’s a tricky debate as Washington looks to strike a balance between keeping access open and costs low.

In a Thursday meeting, MedPAC debated a handful of policy proposals to try and navigate this tightrope. Analysts floated ideas like making some expansions permanent for all fee-for-service clinicians; covering certain telehealth services for all beneficiaries that can be received in their homes; and covering telehealth services if they meet CMS’ criteria for an allowable service.

But many MedPAC members were wary of making any concrete near-term policy changes, suggesting instead the industry should be allowed to test drive new telehealth regulations after COVID-19 without baking them in permanently. 

“I don’t think what we’ve done with the pandemic can be considered pilot testing. I think a lot of this is likely to go forward no matter what we do because the gate has been opened, and it’s going to be really hard to close it,” Marjorie Ginsburg, founder of the Center for Healthcare Decisions, said. But “I see this just exploding into more fraud and abuse than we can even begin imagining.”

Paul Ginsburg, health policy chair at the Brookings Institution, suggested a two-year pilot of any changes after the public health emergency ends.

However, it would be “regressive” to roll back all the gains virtual care has made over the past year, according to Jonathan Perlin, CMO of health system HCA.

“These technologies are such a part of the environment that at this point, I fear [it] would be anachronistic not to accept that reality,” Perlin said.

Among other questions, commissioners were split on how much Medicare should pay for telehealth after the pandemic ends. 

That parity debate is perhaps the biggest question mark hanging over the future of the industry. Detractors argue virtual care services involve lower practice costs, as remote physicians not in an office don’t need to shell out for supplies and staff. Paying at parity could distort prices, and cause fee-for-service physicians to prioritize delivering telehealth services over in-person ones, some commissioners warned.

Other MedPAC members pointed out a lower payment rate could stifle technological innovation at a pivotal time for the healthcare industry.

MedPAC analysts suggested paying lower rates for virtual care services than in-person ones, and paying less for audio-only services than video.

Commissioners agreed audio-only services should be allowed, but that a lower rate was fair. Commissioner Dana Gelb Safran, SVP at Well Health, suggested CMS should consider outlining certain services where video must be used out of clinical necessity.

Previously, telehealth services needed a video component to be reimbursed. Proponents argue expanded access to audio-only services will improve care access, especially for low-income populations that might not have the broadband access or technology to facilitate a video visit.

Another major concern for commissioners is how permanently expanding telehealth access would affect direct-to-consumer telehealth giants like Teladoc and Amwell. If all telehealth services delivered at home are covered, that could allow the private companies to “really take over the industry,” Larry Casalino, health policy chief in the Weill Cornell Department of Healthcare Policy and Research, said.

Because of the lower back-end costs for virtual care than in-office services, paying vendors the same rate as in-office physicians could drive a lot of brick-and-mortar doctors out of business, commissioners warned.