MedPAC has released its June 2016 Report to the Congress on Medicare and the Health Care Delivery System. The report includes recommendations for a number of Medicare policy reforms and analyses of various health care market developments. Several chapters address Medicare drug policy, including a review of external factors that influence the prices Medicare pays for prescription drugs. With regard to Medicare Part B drug policy, MedPAC discusses potential modifications to Medicare Part B drug reimbursement, such as reducing dispensing and supplying fees, along with approaches to improving the quality and reducing the costs of oncology care (since more than half of Medicare Part B drug spending is associated with anticancer and related drugs). Likewise, MedPAC examines the Medicare Part D prescription drug program and offers recommendations for giving plan sponsors greater financial incentives and mechanisms to manage the benefits of high-cost enrollees; exclude manufacturer discounts on brand-name drugs from counting as enrollees’ true out-of-pocket spending; eliminate beneficiary cost sharing above the catastrophic cap; and increase financial incentives for low-income beneficiaries to use lower-cost drugs and biologicals.

MedPAC also discusses development of a unified Medicare payment system for post-acute care, including its unified prospective payment system (PPS) prototype that it believes accurately predicts resource needs for nearly all patient groups. MedPAC raises various implementation considerations, including the need to develop separate payment models for nontherapy ancillary services and the combination of routine and therapy services; adjustments to recognize lower costs in home health agencies compared to institutional settings; the need for outlier policies and labor cost adjustments; future adjustments to reward high-quality, efficient care; conforming regulatory reforms; and an appropriate transition period, among other policy provisions.

In addition, the report addresses:

  • Implementation of Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) physician fee schedule reforms, including recommendations that eligible alternative payment entities be responsible for total Part A and B spending for their enrollees, have opportunities to share savings with beneficiaries, and qualify for incentive payments only if they successfully control costs and/or improve quality.
  • Use of competitive pricing to set Medicare beneficiary premiums to encourage beneficiaries to select more efficient care;
  • How to improve efficiency and preserve access to emergency care in rural areas, including discussion of giving isolated rural hospitals the option of converting to an outpatient-only model.
  • Medicare telehealth services, including potential expansion within risk-based payment models such as Medicare Advantage, bundled payments, and accountable care organizations.
  • Dual-eligible beneficiary policies, including a status report on the CMS financial alignment demonstration project testing new models of care for dual-eligible beneficiaries.