Advocacy & Practice Updates — Advocacy & Practice

Medicare’s Payment Advisors Examine Physician Payments

What is MedPAC?

The Medicare Payment Advisory Commission (MedPAC) is a panel of practitioners, facility administrators, and patient advocates that meets 6 times a year to discuss and recommend ideas on Medicare payment policy to Congress and the Centers for Medicare & Medicaid Services (CMS).

In recent years, the commission has reviewed and made recommendations on several concepts that affect physician payment, including leveling payment for evaluation and management services between the hospital outpatient and physician office settings of care. Most recently, MedPAC has been looking into payment policies for promoting evidence-based medicine.

December 23, 2014    --    Back to Retina Practice News

MedPAC evaluates policies promoting evidence-based medicine 

ASRS is committed to protecting your payments

Throughout 2014, the Medicare Payment Advisory Commission (MedPAC) has been assessing options for “developing payment policy to promote the use of services based on clinical evidence.” In November, MedPAC discussed policies that could, individually or in combination, adversely affect retina specialists’ reimbursement and choice of medication:

  • Reinstituting least-costly alternative (LCA)—requiring use of the least-expensive, most-equivalent drug (eg, Avastin over Lucentis)
  • Implementing episode-of-care-based payment—bundling payment for drugs and procedures provided to a patient during a defined time period (eg, before; during; and 30, 60, or 90 days after a procedure)
  • Replacing average sales price (ASP) +6% for physician-administered drugs with a flat fee—eliminating the add-on payment covering administrative costs associated with drugs

As we reported earlier this month, each of these payment policies would create sizable hurdles to your ability to deliver evidence-based, patient-centered care. In a letter we sent to MedPAC, ASRS:

  • Emphasized retina specialists’ critical involvement in supporting evidence-driven practices
  • Expressed concerns with the discussed payment options
  • Offered assistance in developing alternative models to more accurately account for actual cost of treatment

Replacing ASP +6%, which is actually +4.2% due to sequestration, is of particular concern

Our letter urged MedPAC to recognize that the 6% payment for physician-administered drugs is not an add-on that equates to profit and should not be treated as a bonus payment that can be repurposed in other ways. We stressed that Congress mandated the 6% add-on to ASP to cover any shortfall that the physician may incur between ASP and actual acquisition cost or any overhead associated with purchasing, handling, and administering the drug. As MedPAC previously stated, the add-on payment may not account for wholesale fees or state and local taxes (as high as 2%) that physicians pay. With the add-on payment reduced to 4.2%, most (if not all) of what remains is typically dedicated to covering other administrative costs (eg, inventory management, refrigeration, drug security, prescribing, and cataloging).

Because we feel that all of the policy options discussed at the meeting would fall well short of encouraging evidence-based medicine and would result in less patient-centered care, we pressed the commission to recommend only policy options adaptable to new and evolving clinical evidence and flexible enough so you can choose the best treatment strategies for your patients.

MedPAC finds physician payment adequate, revisits SGR repeal, floats recommendation on new primary care incentive payment, and hints at additional scrutiny of Medicare Advantage plan networks

As MedPAC heads into its December and January meetings, it is assessing physician and hospital payment adequacy as well as the Medicare Advantage (MA) program’s status. At the December meeting the commission makes draft recommendations, which it reviews and finalizes in January and provides to Congress in its March report.

Payment adequacy is primarily based on measures of Medicare beneficiary access, but the commission also examines:

  • Provider payments
  • Shifts in procedure setting of care (eg, office-based to hospital outpatient department)
  • Facility openings, closings, and mergers over the year
  • Trends in physician practices purchased by hospitals and hospital systems
  • Aggregate payments to facilities and physicians
  • Providers’ overall ability to deliver care

MedPAC’s analysis of Medicare Advantage more strictly revolves around Medicare beneficiary access.

Physician adequacy session results in draft recommendation potentially impacting all non-primary care services

During this session the commission:

  • Asserted that physician payment is adequate
  • Noted site-of-care fluctuations for certain procedures and imaging services
  • Questioned whether its survey that assesses beneficiary access to physicians is missing the granularity necessary to recognize access problems with Medicare Advantage plans
  • Reaffirmed its previous position (see page 8 of policy statement) on the urgency of repealing the sustainable growth rate (SGR)

However, the commission also discussed a draft recommendation to replace the Primary Care Incentive Payment (PCIP) program, which expires on December 31, 2015. The PCIP program delivers bonus payments to qualified physicians who provide a specified set of primary care services and is afforded through 10% of overall Medicare Part B payments. According to MedPAC, a new primary care bonus payment is necessary because PCIP is expiring, the Medicare Physician Fee Schedule (MPFS) undervalues primary care services, and due to compensation disparities between primary care and specialist.

Unlike the PCIP program, the new methodology pays the primary care bonus payments by reducing MPFS payments for all other services. Specifically, bonus payments would be equal to the average payment under the PCIP program and derived from a 1.4%payment reduction for 75% of services included on the MPFS.

In January, MedPAC will vote on recommending that, The Congress should establish a prospective per beneficiary payment to replace the Primary Care Incentive Payment program (PCIP) after it expires at the end of 2015. The per beneficiary payment should equal the average per beneficiary payment under the PCIP. Funding for the per beneficiary payment should come from reduced fees for all services in the fee schedule other than eligible primary care services.

The commission may also discuss changes to the recommendation in January, so it is possible the final version could be different from the draft language.

No draft recommendations on Medicare Advantage, but narrowing networks garners attention

MedPAC staff reported that Medicare Advantage (MA) continued its strong growth in 2014. Most beneficiaries participating in MA are enrolled in Health Maintenance Organization (HMO) plans, and that because the value of extra benefits has not declined for beneficiaries, plans continue to charge extra premiums for the added benefits (about $75/month). Additionally, decreasing MA plan bids to CMS have exerted pressure on plans to restrain costs and lower their bids, underpinning why MA plans continue using aggressive cost-containment tactics that result in the problems you and your patients are experiencing.

Although the commission did not make draft recommendations, it did indicate it intends to examine the impact of the Affordable Care Act (ACA) on MA benchmark bids over time. The commission noted that although the ACA is driving down MA plan bids, there have been other impacts – like tightening networks – which are of particular concern.