It’s the beginning of the season! Nope, not election or back-to-school season – it’s MedPAC season! The Medicare Payment Advisory Commission opened up their annual cycle last week discussing the sustainability of the Medicare program and issues in rural health care. And we are here for all of it!
MedPAC Has a Job to Do
Congress created the Medicare Payment Advisory Commission (MedPAC) to recommend Medicare payment updates and strategies to improve the Medicare program. MedPAC is mandated in their charter to submit recommendations on annual payment updates for several fee-for-service payment sectors within Medicare. The other half of the MedPAC charter focuses on improvements and innovations for the Medicare program.
MedPAC Weighs in on Medicare’s Future
So, what did MedPAC say in their September 5, 2024 meeting about the future financial sustainability of the Medicare program? Staff reported that national healthcare spending is now at $4.5 trillion (2022) or 17.3% of GDP and said those levels will increase to 19.7% in 2032. Staff also pointed out that Medicare’s HI Trust Fund will become insolvent in 2035. While discussing factors increasing spending like demographics (more older Americans) and inflation, the Commission purposely called out the cost of GLP-1 drugs and said that those drugs alone will increase Medicare Part D spending by $36 billion over the next 10 years. The Commission rounded out the meeting discussing beneficiary enrollment/financial obligations, beneficiary care disparities, and clinical workforce shortages in the U.S.
Rural Beneficiary Cost-Sharing is a Major Problem
Shifting from the financial side, MedPAC switched to one of their main focuses for this year’s agenda – how to ensure the viability of rural health care in America. The most animated discussion of the day revolved around cost-sharing obligations for rural Medicare beneficiaries receiving care in Critical Access Hospitals (CAHs). Staff analysis showed that rural Medicare beneficiaries receiving care in CAHs pay significantly more than beneficiaries in Prospective Payment System (PPS) hospitals due to a byproduct of how CAHs are paid. One analysis even showed that half of CAHs’ outpatient payments come from beneficiary copayments.
The debate among Commissioners was not about whether this is a problem – all agreed it was – but whether to address the situation with a quick fix or to fix the entire CAH payment system. The majority of Commissioners seemed to settle around the idea of changing beneficiary cost sharing on services to 20% of FFS payment rates, while a faction wanted to not only change cost-sharing but also the entire payment system for CAHs. There was also discussion of placing a cap on outpatient coinsurance for rural beneficiaries to limit out-of-pocket costs. This issue will be discussed again publicly in the January 2025 Commission meeting.
Rural Quality Reporting is Harder to Understand
The final session revolved around rural quality reporting – and if there were metrics available from rural providers. Staff outlined all available metrics but did note that some rural providers are not required to participate in Medicare quality reporting programs. Staff and Commissioners also pointed out the difficulty of Medicare Advantage plan reporting – which is done at the contract level – making it hard to tell what is going on within specific health care markets. Many Commissioners also discussed the difficulty of measuring quality if providers only have small amounts of patients/data (sample size issues). The Chairman said this would be a chapter in an upcoming report, but there were no recommendations or further work outlined on the issue.
What’s Next
So, next steps? After the payment adequacy discussions in October/November/December, we expect these topics and discussions on Medicare Advantage to resurface in January. And we will be in the virtual front row with popcorn!
