The Medicare Payment Advisory Commission (MedPAC) is required by law to annually review Medicare payment policies and make recommendations to Congress. Consistent with previous Reports, MedPAC’s recommendations address long term concerns with increasing healthcare spending and short term concerns with various Fee-For-Service (FFS) policies.

Overall, MedPAC reiterates a previously stated goal of moving Medicare towards a quality-based payment model. MedPAC believes that moving to this type of payment model will improve consistency of quality and spending to protect patients both medically and financially. In simplified terms, the Commission believes this can be achieved by encouraging more primary care and less emergency room visits.

One area of interest to the Commission has been Medicare payment rates for services that can be provided in multiple settings.  Medicare often pays vastly different amounts for similar services depending upon the setting in which the service is delivered.  Specifically, the report recommends that Congress reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications.

The 2014 report also reiterates MedPACs recommendation from previous reports to replace the Sustainable Growth Rate (SGR) with payment updates that are higher for primary care providers than for specialists. The Commission also wants to further incentivize shared saving Accountable Care Organizations (ACO’s). Finally, the report recommends that HHS identify and adjust overpriced fee-schedule codes.

The MedPAC report also recommends that Congress eliminate the 2015 automatic payment update for ambulatory surgical centers and that Congress direct the Secretary of HHS to implement a value-based purchasing program for ambulatory surgical center services no later than 2016.

The Report also provides a status update on the Medicare Advantage (MA) program.

In 2013, enrollment in MA Plans increased by 9 percent to 14.5 million enrollees. The program is projected to increase enrollment from 3-5% in 2014. The Commission found that both quality and patient experience measures remained relatively unchanged. There was improvement in a number of indicators, including process measures such as Cancer screenings, hospital readmission rates, and Part D drug adherence measures. As a result, plan star ratings, which are used to determine quality bonuses, improved for many plans. The Commission recommended encouraging more competitive employer group bids by directing the Secretary to determine payments for employer group MA plans in a manner more consistent with the determination of payments for comparable non-employer plans. The report also recommended including hospice in the MA benefits package. Currently, hospice is paid for by the Medicare FFS.

Because MedPAC is an Advisory Committee, it does not have the authority to implement any of the recommendations they make.  Typically, the recommendations require some affirmative action on the part of Congress.  It remains to be seen whether the 113th Congress will act on any of MedPACs recommendations.

Thanks to Bill Finerfrock, Matt Reiter, Lara Burt and Carolyn Bounds for contributing this article.