On April 4-5, 2019, the Medicare Payment Advisory Commission (MedPAC) held the final meeting of the current cycle. The Commission voted on a recommendation related to encounter data in Medicare Advantage (MA) and coding for emergency departments. Other discussions centered around value-based payment and Part D drugs. The Commission will be releasing a report to the Congress in June.

Commission Wraps Up Work on Medicare Advantage Encounter Data

Throughout this cycle, the commission has been looking at Medicare Advantage data. A session at the April meeting marked the conclusion of the meeting with the commissioners voting to support the following recommendation, which will be included in the June 2019 report:

The Congress should direct the Secretary to establish thresholds for the completeness and accuracy of Medicare Advantage (MA) encounter data and:

• Rigorously evaluate MA organizations’ submitted data and provide robust feedback;
• Concurrently apply a payment withhold and provide refunds to MA organizations that meet thresholds
• Institute a mechanism for direct submission of provider claims to Medicare Administrative Contractors:
  • As a voluntary option for all MA organizations that prefer this method, and
  • Starting in 2024, for individual MA organizations that fall to meet threshold or for all MA organizations if program-wide thresholds are not achieved.

MedPAC Supports Recommendation for Coding Emergency Department Visits

The commission briefly continued their discussion on coding for emergency departments. The conversation focused on the shift in coding from lower acuity to higher acuity for Medicare beneficiaries. Prior to 2005, ED visits were coded evenly across acuity levels. Since then, visits have been coded with higher acuity, resulting in rapidly increasing spending between the years of 2005-2017.

The commission did discuss how patients have become sicker since 2005 but referenced their previous data analysis that controlled for these increases, demonstrating that sicker patients did not result in the increased coding intensity. Commissioners agreed that a lack of national guidelines ED coding is a contributing factor and voted unanimously in favor of the following recommendation, which will appear in the June report:

“The Secretary should develop and implement a set of national guidelines for coding hospital emergency department visits under the outpatient prospective payment system by 2022.”

MedPAC Looks at Specialty Drugs in Part D

MedPAC began day two of the April meeting with a session on options to increase the affordability of specialty drugs and biologics in Medicare Part D. The session began with a presentation from staff that outlined two potential policy directions: limiting cost sharing for each specialty tier prescription and replacing the coverage-gap discount with a cap discount while also restructuring the catastrophic benefit

Generally, commissioners were not in favor of the first policy direction but were more receptive to the second option. This second option would replace the coverage-gap discount with a manufacturer “cap discount” which would apply to high-priced drugs that are typically placed on specialty tiers. In addition, the catastrophic benefit would be restructured in a way that aims to balance access and affordability with overall program costs. Staff did not offer specifics on what the catastrophic benefit would like in this scenario; instead, they left this open for commissioners to discuss at both this and future meetings.

A few commissioners said they thought using a cap discount and restructuring the catastrophic benefit would align incentives across Part D, helping to lower costs. Commissioners did note that the specifics of this would have to achieve the right balance in cost distribution among stakeholders.

The research presented during this session will be included in MedPAC’s June report and discussions on prescription drugs will likely continue in the next term.

Value-Based Payment to be Focus of Future MedPAC Work

The meeting also included a session on expanding the use of value-based payment in Medicare, a topic that commissioners had expressed interest in at previous meetings. The presentation from MedPAC staff was mostly focused on using Medicare Advantage (MA) and Accountable Care Organizations (ACOs) as a foundation for broader use of value-based payment.

While the Commissioners did not unanimously coalesce around one policy direction, some commissioners expressed a preference for the following scenario presented by staff: Medicare requires all FFS providers to participate in ACOs in order to receive FFS payments and beneficiaries are still able to enroll in MA plans. The role of ACOs in this option was seen positively with some of the commissioners noting their general support for ACOs and care coordination principles. Concerns over whether ACOs have the administrative capabilities for the more intensive options involving claims and payment were raised. Another comment during the discussion noted the need to consider the unique situation of rural providers in any policy changes.

Value-based payment will feature prominently in MedPAC’s work during the next term, which begins September 2019.

Commission Discusses Variability Between Functional Assessments in Different Care Settings, Requests Development of Recommendations

Due to concerns regarding widely variables outcomes from assessments on a patient’s functional status, the commission requested additional information about data from patients’ evaluations across post-acute care (PAC) settings; these evaluations are indicators for payment rates. The commission discussed findings that the assessment of a patient’s functional status varied widely when that patient moved across levels of care.

During the discussion, commissioners agreed that outcomes from functional assessments should not be relied upon to make payment determinations due the wide variability of results. In the future, the commissioners hope to discuss alternative ways to evaluate functioning status, such as utilizing new technologies including video assessments. Using technology could enable an auditing program, but the commissioners noted that the use of technology would require further discussion of security and interoperability. Overall, the commission decided that new ways to assess patient functioning status should be explored and more discussion is needed to develop recommendations