MedPAC Report: State of Medicare Reimbursement & Enrollment

MedPACIn the first of two reports for 2015, the Medicare Payment Advisory Commission (MedPAC) issued its report on the state of Medicare reimbursement and enrollment. The March report contains recommendations to Congress on the Medicare fee-for-service (FFS) payment systems, the Medicare Advantage Program and the Medicare prescription drug program (Part D).  Although the recommendations are advisory, MedPAC’s recommendations have had a strong influence on Medicare payment policies adopted by Congress.  The following are some of the general findings and recommendations reported in the March 2015 MedPAC report.

Findings

Although there has been a slowdown in per-beneficiary spending over the last few years, aggregate Medicare spending is projected to increase 5-7% annually over the next decade as the baby-boomer generation ages into Medicare. The Medicare population is projected to increase from 54 M beneficiaries today to over 80 M beneficiaries by 2030.

The report states that new entrants to the Medicare program will temporarily reduce the average age of the Medicare population increasing overall spend but potentially lowering the average spend per beneficiary.  That may be offset however as seniors currently entering Medicare suffer from a higher prevalence of multiple chronic conditions than in the past.

All and all, the report indicates that beneficiary access to physicians is adequate and largely unchanged since last year and that the growth in the number of physicians and other health professionals providing services to Medicare beneficiaries has kept pace with the growth in the beneficiary population. Utilization per beneficiary grew by 0.5% overall in 2013 however growth was considerably higher in evaluation and management services while in other areas, utilization actually declined.

  • Evaluation and management services grew by 1.4%
  • Major procedures grew by 1.2%
  • Other procedures grew by 0.1 %
  • Imaging declined by 1.0%
  • Tests declined by 2.1%

For Ambulatory Surgical Center (ASC) services, the report states that beneficiary access to services is adequate and that in 2013 the number of Medicare-certified ASCs increased by 1.1% while the volume of services per beneficiary increased by 0.5%. The report also recommends eliminating the update to the payment rates for ASCs for calendar year 2016.

Other finding and statistics of note:

  • Medicare’s payments relative to private insurer payments have remained relatively steady at around 79%.
  • In 2013, the Medicare program paid $68.6 B for physician and other health professional services, or 16 percent of benefit spending in Medicare’s traditional fee-for-service (FFS) program.
  • This spending covered 1.1 B services for 32 M FFS beneficiaries.
  • 98% of Part B FFS enrollees had at least one service.
  • Program payments per person served were just over $3,000.
  • 876,000 professionals billed Medicare through the fee schedule—573,000 physicians and 303,000 nurse practitioners, physician assistants, therapists, chiropractors, and other practitioners.
  • Medicare beneficiaries report high levels of satisfaction with their care and are slightly more likely to report being satisfied than near-beneficiaries with private health insurance.

Recommendations

In the report, MedPAC supported the repeal of the sustainable growth rate (SGR) Medicare payment formula and recommended replacing it with a 10-year path of statutory fee schedule updates and a transition towards value-based care and payment models (the recently passed MACRA bill largely followed these recommendations).  Other recommendations that may impact physician reimbursement include:

  • Incorporating site-neutral reimbursement to align payment among hospital outpatient departments and physician offices.
  • Extension of the Medicare Primary Care Incentive Payment Program which is set to expire at the end of this year. The program provides a 10% bonus payment program for primary care services provided by eligible practitioners.
  • Identifying overpriced fee-schedule services and reducing their relative value units (RVUs) accordingly in a budget neutral fashion.  This would be supported by regularly collected data used to establish more accurate work and practice expense values
  • Recommends that, beginning this year, Congress specify that the RUV reductions achieve a specified numeric goal for five consecutive years of at least 1.0% annually of fee schedule spending.

The complete MedPAC March report can be found here.

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