The Medicare Payment Advisory Commission (MedPAC) met on April 10 and 11 to vote on recommendations to update and improve the accuracy of physician fee schedule (PFS) payments and a number of issues related to Medicare Advantage (MA).
Commissioners voiced concerns about whether current law updates to payments under fee-for-service Medicare’s PFS will continue to be adequate to ensure beneficiary access to physician care given inflation trends. They have also previously discussed concerns about the accuracy of relative value units under the PFS, including the potential for duplicative payments for practice expense when physician services are provided in hospital outpatient departments or other facility settings. At April’s meeting, the commission voted to adopt the following two draft recommendations: (1) Congress should replace the current-law updates to the PFS with an annual update based on a portion of the growth in the Medicare Economic Index (MEI; such as MEI minus 1 percentage point); and (2) Congress should direct the HHS Secretary to improve the accuracy of Medicare’s relative payment rates for clinician services by collecting and using timely data that reflects the costs of delivering care.
Commissioners also discussed several issues related to MA plans including concerning trends in the Part D plan market and the impact on market stability for these plans. Additionally, commissioners reviewed an analysis of the utilization of supplemental benefits in MA plans and found that $38 billion in MA rebates were used to provide non-Medicare services in 2024. Data on supplemental benefits is currently limited, with only vision and hearing services potentially including sufficient encounter data for analysis, but additional data may soon be available for analysis due to stronger requirements beginning in 2024. The commission plans to include a chapter on these topics in its June report to Congress.
Commissioners reviewed and discussed analytic findings on the impact of MA on rural hospitals’ profitability. MedPAC staff found that MA has grown rapidly in rural areas and that MA growth is associated with reduced rural hospital inpatient and post-acute volume since MA beneficiaries are more likely to bypass rural hospitals than fee-for-surface beneficiaries. However, the MA growth has not significantly impacted revenue, costs, or profits for the rural hospitals. Moving forward, MedPAC plans to refine its analysis to determine if the findings continue and whether they hold for different types of MA plans.