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MedPAC Issues June Report to Congress

In its June report to Congress, the Medicare Payment Advisory Commission (MedPAC) outlines issues of importance to essential hospitals, including Medicare payment strategies for Part B drugs, the Medicare Shared Savings Program (MSSP), and Medicare fee-for-service spending for emergency department (ED) services.

Payment Strategies for Part B Drugs

The report reviews and further develops two of the commission’s previous recommendations to improve price competition and value for Part B drugs: reference pricing and binding arbitration.

Reference pricing would allow Medicare to establish a reference payment amount for groups of drugs with similar health effects currently assigned to separate billing codes. Binding arbitration would establish a system through which Medicare and manufacturers could set payment rates for drugs with limited competition under certain circumstances.

The commission does not make new recommendations on either of these strategies, but presents pros and cons for each and considers how to broadly leverage these recommendations for Medicare Part B drugs.

Medicare Shared Savings Program

The commission also assesses the MSSP’s effect on Medicare spending. MedPAC estimates savings from the program are modest and subject to variation based on how the analysis accounts for beneficiaries who “switch” in and out of accountable care organizations (ACOs).

The report also explores options for assigning beneficiaries to ACOs, including the risks of retrospective assignment and the role of annual wellness visits.

Fee-for-Service ED Spending

The commission presents trends in Medicare fee-for-service spending in hospital EDs, including  nonurgent ED use, and potential changes to hospital ED coding. The commission recommends the Health and Human Services Secretary develop and implement a set of national guidelines for coding hospital ED visits under the Outpatient Prospective Payment System by 2022. According to the commission, this would more accurately reflect the resources hospitals incur when providing care in the ED setting and allow the Centers for Medicare & Medicaid Services to assess and audit hospitals’ coding behavior.

MedPAC issues two annual reports to Congress, including recommendations and analysis on Medicare payment issues. The June report also includes chapters on beneficiary enrollment, restructuring Medicare Part D,  and post-acute care.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Rachel Schwartz is a policy associate at America's Essential Hospitals.

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