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Unified PAC payment feasible, MedPAC says

June 25, 2016
by Nicole Stempak, Senior Editor
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The Medicare Payment Advisory Commission (MedPAC) is concerned about rising drug costs but is confident a unified payment system for post-acute care is feasible. 
The findings were part of the independent congressional agency's annual report to Congress about refinements to Medicare payment systems and on issues affecting the Medicare program. 
MedPAC several changes to Medicare, notably developing a unified payment system for post-acute care as required by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT).
"Our work confirms that a (post-acute care prospective payment system) is feasible and within reach," the commission writes. "Given the long-standing problems with Medicare's payment for PAC, moving to a unified PAC PPS is desirable. ...A truly reformed PAC payment system will ultimately need to embrace episode-based payments."
And while payment is moving forward, the Commission is worried that payment is rising too fast with regards to drug spending. 
"The Commission remains concerned about the rapid growth in drug prices because that growth can affect beneficiary access to needed medications as well as the financial stability of the Medicare program," the commission writes. "But Medicare is part of a larger drug marketplace, and the program's drug payment policies can only affect drug pricing indirectly."
Medicare Part B covers drugs administered by infusion or injection in clinicians' offices and outpatient hospitals as well as certain drugs furnished by suppliers. The commissions suggests potential modifications to how Medicare Part B pays for drugs that could reduce dispensing and supplying fees and how it could improve oncology care, as more than half of Medicare Part B drug spending is associated with anticancer drugs.
The Commission recommends improvements intended to help Medicare Part D be more financially stable following years of rapid growth in the reinsurance portion of Part D. Those changes include giving plan sponsors greater financial incentives and stronger tools to manage the benefits of high-cost enrollees, exclude manufacturer discounts on brand-name drugs from counting as enrollees' tur out-of-pocket spending and slighty increase financial incentives for enrollees who receive the low-income subsidy to use lower cost drugs and biologics. 
The commission also explored:  
  • Using competitive pricing to set beneficiary premiums in Medicare to encourage beneficiaries to choose either traditional fee-for-service or Medicare Advantage, and three possible designs for improving efficiency. 
  • Incentivizing clinicians to participate in alternative payment models established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
  • How telehealth services could be delivered and fit into the Medicare under the MA program under the bundled and accountable care payment models as well as under the traditional FFS model.
  • Issues affecting dual-eligible beneficiaries. The Commission provides an update on the financial alignment demonstration project to test new models of care and examines potential costs of three scenarios for expanding the Medicare Savings Programs, Medicaid programs that assist with Medicare premiums and cost sharing for select low-income Medicare beneficiaries. 
Read the full report here