WASHINGTON — Physicians’ current fee-for-service Medicare reimbursement rates can stay as they are in 2020, the Medicare Payment Advisory Commission (MedPAC) said Friday in its annual March report to Congress.
Under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Congress set a number of updates to the Medicare fee-for-service payment schedule in advance. In that schedule, physicians received a 0.5% increase each year from 2015 to 2019; no further increases are scheduled for 2020 to 2025. However, apart from those updates in individual fee-for-service payments, physicians can also earn bonuses of up to 12% — or penalties of as much as -4% — based on their performance in Medicare’s new pay-for-performance program.
“Overall, access to clinician services for Medicare beneficiaries appears stable and comparable with that for privately insured individuals,” the report authors wrote. “Other measures of payment adequacy are stable and consistent with prior years. Therefore, the Commission does not see a reason to diverge from the current-law policy of no update for 2020.” MedPAC also had agreed with the 0.5% increase for 2019.
Although physicians may find their overhead costs increasing more than the updates they’re receiving, all indicators are that this isn’t stopping them from seeing Medicare patients, MedPAC executive director Jim Mathews, PhD, told MedPage Today during a conference call with reporters.
“One of the factors that we look at is the relationship between the update in law relative to measures of costs physicians face,” he said. Although there may be some indications that physicians’ costs have increased, “all our other indicators of payment adequacy are positive with respect to beneficiary access, physician participation, and quality of care.”
“There is always an element of judgment that comes into these determinations, but … the first question we ask is, ‘Is any update warranted to ensure beneficiary access, and if so, what should that update be?'” he continued. “Here, when we look at the preponderance of indicators in the physician sector, the commission came to the conclusion that the update would not be warranted or necessary this year in order to maintain access. But it is something we do explicitly consider in coming to these recommendations.”
The commissioners did take issue — but only slightly — with Congress’s proposed increase for Medicare hospital payments of 2.8%. “When we look at the number of hospitals participating, the volume of service, beneficiary access to care, and quality of care, those indicators in the hospital sector are generally positive,” Mathews said. However, one indicator less positive over the year [is hospitals’] Medicare margin — how well they’re doing financially as a result of participating in Medicare.”
In particular, “in the last year or two, the margins for the group of hospitals we deem relatively efficient have also gone negative; they were at -2% in 2017,” he said. “The reason it’s concerning for us when their margins go negative is that our authorizing statute requires us to examine factors related to delivery of care, so when … a hospital is efficient and still can’t stay in the black, that’s cause for concern.”
To address that problem, “One approach would be to give a broad update across all hospitals,” but that’s expensive and might end up giving money to hospitals that don’t need it, Mathews said. So instead, “this year we took a two-pronged approach.”
The first part involves redesigning Medicare’s quality incentive program for hospitals. “Currently there are four such programs in operation … Some of these programs are duplicative, and they impose a fair degree of burden on hospitals, and there is some question about the utility of measures collected under these,” he said. “We recommended that these four programs be consolidated and streamlined in a method that doesn’t require much reporting burden at all.”
In addition, MedPAC recommended that money collected under two “penalty-only” reporting programs — the Readmissions Reduction Program and the Hospital-Acquired Conditions Program — be kept by hospitals, “with the money being redirected to hospitals that perform the best under Medicare,” said Mathews.
The second piece involves the update itself; instead of doing a 2.8% overall update, “we’d give all hospitals a 2% update and take the other 0.8% and distribute that through our revised hospital incentive program … so hospitals in the aggregate would get all of the dollars they would under current law but more of those dollars being distributed by the Medicare program to those hospitals performing the best on quality and cost metrics,” said Mathews. “We are helping the efficient hospitals and turning the tide on their financial performance.”
Other recommendations from the March report included:
- No update for ambulatory surgery centers (ASCs). In balancing the goals of maintaining beneficiary access to ASCs, paying providers adequately, appropriately restraining spending on ASC services, and keeping providers under financial pressure to constrain costs, “the commission concludes that the ASC update for 2020 should be eliminated,” the report said. In addition, Mathews told reporters, the commission “recommended that the [Health and Human Services Secretary] collect cost data for ASCs to better establish their financial performance under Medicare.”
- A 1.9% increase — consistent with the formula set up under the Protect Access to Medicare Act of 2014 — in payments for outpatient dialysis services. “All the indicators [for this sector] are positive,” said Mathews. “We see the capacity of providers and the volume of services growing pretty much in lockstep with the number of beneficiaries with end-stage renal disease who need these services.”
- A 5% decrease in the base payment rate for home health services. “There is very strong access to care as measured by the capacity and supply of providers,” Mathews said. “We had a slight decline in volume in 2017 but we believe this reflects a number of efforts, including some [Medicare anti-fraud] efforts.” Although quality of care indicators were mixed, “[there is] very strong financial performance under Medicare with a 2017 margin of 15%.”
The next MedPAC report will be issued in June.