March 2-3, 2023

03/02/2023 . 11:15 am - 12:45 pm

Reforming Medicare's wage index systems

Staff Contacts:

ISSUE: Medicare’s prospective payment systems (PPSs) use wage indexes to adjust Medicare base payment rates for geographic differences in labor costs. Because of limitations of the data sources used, the use of broad labor market areas, and the number of wage index exceptions that the Congress and CMS have added over time to the IPPS wage index, Medicare’s PPS wage indexes are inaccurate and inequitable.

KEY POINTS: Last September, commissioners discussed an alternative wage index method, similar to one recommended by MedPAC in 2007, that would use cross-industry, occupation-level wage data; reflect county-level differences in wages between and within metropolitan statistical areas and statewide rural areas; cap wage index differences across adjacent counties; and have no exceptions. Our simulations showed that this method would more accurately reflect geographic differences in market-wide labor costs at the county level, limit variation in wage index values among providers that are competing for labor within a market or in adjacent markets, and be less subject to manipulation.

ACTION: Commissioners will discuss the Chair’s draft recommendation for reforming Medicare’s PPS wage index systems.

03/02/2023 . 2:00 pm - 3:55 pm

Addressing the high prices of drugs covered under Medicare Part B

Staff Contacts:

ISSUE: Historically, Medicare has had only an indirect influence on how drugs are priced. Medicare has lacked or has not used tools to strike a balance between providing financial rewards for innovation with value and affordability of care for beneficiaries and taxpayers. Medicare also lacks tools to promote price competition among drugs with therapeutic alternatives.

KEY POINTS: In the Commission’s June 2022 report to the Congress and more recently at the January 2023 meeting, we described alternative approaches for Medicare to address (1) high prices and uncertain clinical evidence for Part B accelerated approval drugs, (2) lack of price competition for drugs with similar health effects, and (3) financial incentives associated with the percentage add-on to Medicare Part B’s payment rate.

ACTION: Commissioners will review and discuss the three policy approaches and the Chair’s draft recommendations to improve payment of Part B drugs.

03/02/2023 . 4:00 pm - 5:15 pm

Mandated report: Evaluation of a prototype design for a post-acute care prospective payment system

Staff Contacts:

ISSUE: The Congress required that the Commission and the Secretary of Health and Human Services (HHS) develop prototypes for a unified PAC payment system for all PAC providers that set payments based on characteristics rather than setting. The Improving Medicare Post-Acute Care Transformations (IMPACT) Act of 2014 mandated three reports. The first report was completed by the Commission in 2016 and recommended features of a design. The second report was issued by CMS/ASPE in the Department of Health and Human Services (HHS) in July 2022 and included a prototype design. The Commission is required to submit the third report, with recommendations, by June 30, 2023.

KEY POINTS: A PAC PPS is feasible using currently available data and could establish accurate payment rates. There are several issues that would accompany the implementation of a PAC PPS.

ACTION:  Commissioners will discuss the draft report and the chair’s draft recommendation.

03/03/2023 . 8:30 am - 10:25 am

Favorable selection and future directions for Medicare Advantage payment policy

Staff Contacts:

ISSUE: Favorable selection into Medicare Advantage (MA) occurs when Medicare beneficiaries with actual costs below the cost predicted by their risk score are more likely to join MA than fee-for-service (FFS) Medicare. Because MA county benchmarks rely on FFS spending estimates, it is important that the FFS-enrolled population in each county continues to provide a reasonable basis for calculating MA benchmarks.

KEY POINTS: New analysis finds favorable selection in MA, which, along with declining FFS enrollment, suggests that using the FFS population as the basis of benchmarks is becoming less viable.

ACTION: Commissioners will discuss the implications of favorable selection in MA and alternative approaches to setting benchmarks.

03/03/2023 . 10:30 am - 11:45 am

Aligning fee-for-service payment rates across ambulatory settings

Staff Contacts:

ISSUE:  Medicare payment rates often differ for the same service among ambulatory settings, which include physician offices, ambulatory surgical centers (ASCs), and hospital outpatient departments (HOPDs). These payment variations encourage arrangements among providers that result in the billing of services shifting to the settings with the highest payment rates, thereby increasing total Medicare spending and beneficiary cost sharing.

KEY POINTS: Some ambulatory services cannot be safely provided in freestanding offices or ASCs and should be provided only in HOPDs. However, many other services can be safely provided in multiple settings, and a prudent purchaser should not pay more for those services in one setting than in another. For these services, payment rates could be aligned across the three ambulatory settings to more closely match the payment rate of the lowest cost setting without adversely affecting beneficiaries’ access to care.

ACTION: Commissioners will discuss the Chair’s recommendation for aligning payment rates for select services across the three ambulatory settings.