On November 5 and 6, 2015, MedPAC held its monthly meeting in Washington, D.C. to discuss Medicare issues and policy questions, develop and approve reports, and make recommendations to Congress.  Among the topics discussed were possible reforms to Medicare Part B drug payment policies, including changes that would allow the Medicare program to share in savings of hospitals that participate in the 340B Drug Discount Program, and coordination of care for dual-eligible beneficiaries. 

The topics presented and discussed at the meeting were:

  • Part B drug payment policy issues;  
  • Dual-eligible beneficiaries: status report on current and future analytic work;  
  • Telehealth services and the Medicare program;  
  • Developing a unified payment system for post-acute care (mandated report);  
  • Next steps in continuing to support primary care; and  
  • Sharing risk in Medicare Part D.

The session on Part B drug payment policy issues explored two related issues.  First, the presenters provided background on the average sales price (ASP) payment system for drugs and discussed policy alternatives, as commissioners had raised concerns about whether the 6 percent add‑on to ASP creates incentives for use of higher-priced drugs.  Various policy options were discussed, and the presenters suggested a flat add-on, which would increase payments to physicians overall.  However, there was concern that payments would decrease to hospitals and some physician specialties.

Second, the presenters discussed whether Medicare should be able to share in the savings of hospitals that participate in the 340B Drug Discount Program by reducing Medicare payment rates for Part B drugs in 340B hospitals.  The presenters offered three options for sharing 340B savings with beneficiaries and the Medicare program:  (1) reduce the Medicare payment rate by 22.7 percent of ASP (the estimated average discount on 340B drugs); (2) reduce the payment rate by 10 percent of ASP; or (3) reduce the beneficiary copayment by 22.7 percent, with no change in Medicare payment.  Projected reduction in total payments to 340B hospitals for Part B drugs under the various options are $830 million under option 1; $365 million under option 2; or $150 million under option 3.

The session on dual-eligible beneficiaries discussed the ongoing challenge of developing ways to coordinate services across Medicare and Medicaid for the 9.9 million individuals who are eligible for both programs.  Commissioners discussed the direction of additional analytic work on this issue, including the development of new models of care that could improve quality and/or lower costs and strategies to expand Medicare Savings Programs.

A detailed agenda and links to the briefs and presentations can be found here.