On Thursday, September 6 and Friday, September 7, 2018, the Medicare Payment Advisory Commission (MedPAC) met for its first public meeting of the 2018-2019 cycle.

The meeting began with a presentation on the “Context for Medicare payment policy,” intended to orient Commissioners and set the scene for upcoming chapters. The presentation outlined existing and projected trends in Medicare spending, overall health care spending growth, and Medicare’s impact on the federal budget. In short, MedPAC staff research found that health care spending growth rates are gradually increasing and per beneficiary spending growth has remained high. Per beneficiary and total Medicare spending are likely to continue to rise, with the size of the Medicare program doubling by 2026 and constituting 6% of the nation’s economy by 2048. Also, growth in premiums outpaced growth in household income from 2006-2016.

It concluded with a discussion on inefficiency and misspending and on overarching challenges for the Medicare program. Commissioners discussed reasons for the spending trends, such as the implementation of the Affordable Care Act, rise of prescription drug spending, aging of the baby boomer population, and the shift in patient volume from the inpatient to outpatient setting. Additionally, Commissioners suggested changing the eligibility age from 65 and further incorporating social determinants of health as ways to improve savings. Bruce Pyenson of Milliman, Inc proposed changing the CMS payment update structure from a 1- to multi-year cycle so stakeholders can manage expectations and curb inflationary spending.

The second session, titled “Aligning Medicare’s statutory and regulatory requirements under a unified payment system for post-acute care,” considered possibilities for a single post-acute care (PAC) PPS. The proposed PPS would capitalize on shared operational and administrative requirements across skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and home health agencies and would set payments based on patient characteristics rather than site of care. Requirements were outlined in tiers, with the first tier establishing requirements for typical patients and the second tier for patients with highly specialized care needs. The presentation argued that a new PAC PPS could replace existing processes earlier than 2021. It received a lot of support from the Commission. Comments focused on length of stay variations, differences in staffing needs, and an assessment tool for measuring patient characteristics which could be standardized and used for monitoring. Commissioners wanted to ensure that a unified PPS did not lead to a one-size-fits-all approach to care delivery.

The third session discussed beneficiary enrollment in Medicare, highlighting an information gap among beneficiaries and a lack of awareness of late-enrollment penalties. It stated that MedPAC should urge the HHS Secretary to work with the Social Security Administration to improve communication about enrollment and eligibility to beneficiaries that are subject to penalties or delays in coverage. Commissioners asked about the causes for the information gap, the impact of the uninsured on risk pools, and the extent to which late penalties are profitable for CMS.

Next, MedPAC staff presented research for two mandated reports on long-term care hospitals (LTCH) and clinician payment in Medicare. The LTCH report studied LTCH payment policy and its impact on Medicare spending, access to care, quality of care, and shifts to other care settings. The clinician payment report examined the effect of payment changes on the volume and intensity of clinician services, the number of clinicians billing Medicare, and the quality of care delivered. A second presentation on clinician payment will be delivered in the spring with updated data, and a finalized chapter is expected in the June 2019 report to Congress.

To finish out the first meeting of this term, the Commission discussed a possible new quality program for hospitals called the Hospital Value Incentive Program (HVIP). The program would merge the Hospital Readmissions Reduction Program and the Hospital Value-based Purchasing Program while eliminating the Inpatient Quality Reporting Program and the Hospital-Acquired Condition Reduction program. The HVIP would have the following characteristics:

• Four outcome, patient experience, and cost measures including readmissions, mortality, spending, and overall patient experience
• Account for social risk factors through peer grouping
• Set prospective performance targets
• Be budget netural to current programs and maintain public reporting

Commissioners reacted positively to the overall model and expressed interested in further exploring the details of what the HVIP program would look like. Further discussion and possible recommendations may be included in future MedPAC meetings.

The next public meeting will take place on October 4-5, 2018.