MedPAC talks cost cutting as IPAB looms

November 1, 2016

Two days of discussions at the Sept. 7 and 8 meetings of the Medicare Payment Advisory Commission highlighted the difficulties and complexities that will face policymakers as they consider solutions to the financial crisis facing Medicare.

Bob GattyWashington-A major challenge facing the new president and Congress in 2017 will be to find a solution to the financial crisis facing Medicare, and medical specialists such as urologists whose patient bases are largely composed of older Americans will undoubtedly be affected.

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Two days of discussions at the Sept. 7 and 8 meetings of the Medicare Payment Advisory Commission (MedPAC) highlighted the difficulties and complexities that will face policymakers as they consider solutions, as well as some of the implications for specialists as efforts to improve payment levels for primary care physicians continue.

IPAB could start in 2017

One key point that emerged: The Independent Payment Advisory Board (IPAB), which the physician community, including the key organizations representing urology, has so strongly opposed, could kick in next year-despite efforts in Congress to kill it off. The IPAB, established by the Patient Protection and Affordable Care Act, would consist of 15 presidentially appointed and senatorially confirmed advisers. Its job is to propose Medicare payment policies aimed at reducing spending growth.

Although IPAB members have not been appointed, MedPAC Special Assistant Maggie Herman reminded commission members that the IPAB’s responsibility passes to the Secretary of Health and Human Services, who becomes responsible for making the necessary recommendations should target growth rates be exceeded.

“To date, the target growth rates have not been exceeded,” Herman said. “However, the Medicare actuaries project that it may be triggered next year.”

The IPAB, according to law, cannot ration care, raise beneficiary premiums, increase cost sharing, or alter eligibility. The savings proposed by the IPAB, or the Secretary should it fail to act, automatically become law unless Congress acts to amend or block them within a specific time period. Congress must then produce savings that at least equal the IPAB’s.

MedPAC Senior Analyst Jennifer Podulka outlined a stark forecast for Medicare’s solvency that went far beyond predictions by Medicare trustees, who predict that the Hospital Insurance Trust Fund will run out of money by 2028, 2 years earlier than projected last fall. But Podulka pointed out that Part A services, financed by a payroll tax, are projected to become insolvent in 12 years as payroll tax revenues are not keeping up with Part A spending.

The infusion of baby boomers into the Medicare program and increases in drug costs and some diseases such as diabetes are all contributing to increased costs, she said, predicting that Medicare spending is projected to rise from 3.5% of the economy today to just over 6% by 2040.

Next: Commission zeroes in on misvalued services

 

Commission zeroes in on misvalued services

Thus, MedPAC spent considerable time at its 2-day meeting discussing ways to curtail spending, noting that many of its previous recommendations have pretty much been ignored. In its gunsights were misvalued clinician services, which were said to offer significant room for financial savings if the appropriate policies were implemented.

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“In the process of setting prices for thousands of services, some services are undervalued and others are overvalued, producing incorrect incentives for their use,” said Podulka. In addition to wasting money, MedPAC Senior Analyst Ariel Winter, MPP, said misvalued procedures lead to an oversupply in some specialties and an undersupply in others, including primary care.

Kevin Hayes, PhD, principal policy analyst at MedPAC, was critical of the current system for setting prices for specific services through the American Medical Association’s Specialty Society Relative Value Scale Update Committee, noting, “The specialty societies represented on the RUC have a financial stake in the outcomes of the review process.”

He pointed out that in recent years CMS has reduced fees for imaging services when more than one service is provided by the same practitioner during the same session and that Congress established a target for adjusting the relative values of overvalued services.

But, he said, a standing panel of experts should be established to help identify overvalued services, as previously recommended by MedPAC, and the multiple procedure payment reduction should be expanded to all imaging services and additional types of diagnostic tests.

MedPAC staff made these key recommendations.

  • Revisit prior recommendations, including establishing the expert panel to identify mispriced services, expand the multiple procedure payment reduction policy and make improvements to how payment rates are validated.

  • Explore a new direction to address payment, risk adjustment, beneficiary attribution, and practice requirements.

  • Combine CPT codes into families of codes to reduce the complexity of the fee schedule.

After lengthy discussion, MedPAC directed staff members to further review some of these ideas and present their findings at a future MedPAC meeting.

Meanwhile, while all of this is happening more or less behind the scenes, there are new players in power in Washington as a result of the November election. There is no doubt the new administration and Congress will have to eventually confront the issue of Medicare’s solubility, perhaps sooner than later, and cannot keep kicking the can down the road.

In the process, efforts to increase the pay of primary care physicians can be expected, possibly at the expense of some specialists who may see reductions in reimbursement for some of their most common, and perhaps profitable, procedures if they are deemed overvalued. There is even a proposal within MedPAC to find a way to pay primary care physicians a monthly stipend, which would be a costly and significant departure from present policy that would add even more pressure on specialists’ payment levels.

All of this will play out in the legislative committees in Congress and at the White House. For urologists, paying attention to these developments will be critical, perhaps even more so than ever before.

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