On September 10-11, 2015, MedPAC held a meeting to discuss several issues related to the Medicare program, including (1) improving the Open Payments program, which makes public the payments from drug and device manufacturers to physicians and teaching hospitals, (2) developing a unified payment system for post-acute care, (3) the growth in stand-alone emergency department facilities, (4) Medicare payment for drugs, (5) patient encounters in Part B fee for service (FFS) versus Medicare Advantage (MA), and (6) patient characteristics that may affect MA plan star ratings for Special Needs Plans.  The Commission discussed several recommendations related to these issues, such as a proposal to require each physician to disclose directly to patients any financial ties with manufacturers of products that the physician prescribes to the patient. 

Payments from Manufacturers to Providers: Options to Increase Awareness

Under the Open Payments program, established to implement the Physician Payment Sunshine Act (Section 6002 of the Affordable Care Act), CMS collects data from drug and device manufacturers, documenting payments and transfers of value from manufacturers to physicians and teaching hospitals.  (For more information about the law, please see King & Spalding’s client alert summarizing CMS’s final rule to implement the statutory requirements.)  MedPAC discussed a snapshot of the data from 2013 and 2014, showing, for example, that payments are concentrated among certain physicians: the top 5 percent of physicians, by received payments, accounted for 86 percent of total dollars, and the top 10 percent of physicians accounted for 91 percent of total dollars.  The Commission discussed ways of improving awareness of these payments by, for example, requiring physicians to disclose to the patient financial relationships with manufacturers when prescribing drugs.  The Commission also discussed a recommendation to include in the reporting requirement payments to other recipients such as non-physician healthcare professionals and other organizations.  

A Unified Payment System for Acute Care: Refining the Methodology

Section 2(b)(1) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (Pub. L. No. 113-185) requires MedPAC to develop a prototype prospective payment system spanning the post-acute care (PAC) settings, using the uniform assessment data gathered previously by CMS.  The Commission must submit a report by June 30, 2016, presenting an approach for a unified, cross-setting PAC payment system and outlining the impacts of moving to such a system.  At the September 10-11 meeting, the Commission evaluated the data regarding post-acute admissions, concluding that it is possible to design a unified system that uses a common unit of services, uses a common case-mix adjustment method, and establishes a common rate for a patient stay.  Commissioners noted that the payment to Home Health Agencies would need to be lower, to adjust for their lower costs. 

Stand-Alone Emergency Department Facilities: Potential Area of Concern

The recent growth in the number of stand-alone facilities offering emergency department services (SAEDs), both hospital-based and independent, has drawn the attention of MedPAC commissioners.  At the meeting, commissioners discussed the characteristics of SAEDs, their business models, and their reimbursement.  Commissioners expressed concern that the growth in SAEDs may be attributable to the higher rates paid to EDs compared to urgent care centers for certain services that are provided in both settings. 

Overview of Medicare Spending on Drugs

MedPAC provided an overview of the ways in which Medicare pays for prescription drugs and pharmacy services under Part A, Part B, MA, and Part D, and the magnitude of that spending.  The Commission noted that Medicare spending for drugs and pharmacy services accounts for 19 percent of total Medicare spending, and is projected to continue growing, in part due to increased use of biologics.  Next month, the Commission will discuss pharmaceutical development and the structure of drug-related industries.   

MA Plans: Analysis of MA Encounter Data and Evaluation of Factors Affecting Special Needs Plans’ Star Ratings 

MedPAC presented its initial analysis of MA encounter data for Part B services for 2012, the first year for which such data were collected.  The preliminary comparison between FFS and MA encounter data revealed that FFS encounters experience a higher per capita use rate of all procedures except major procedures, with a particularly high number of evaluation and management services.  The rate of major procedures was the same in both FFS and MA encounters.  MedPAC is continuing to refine its analysis and explore the use of the data for risk adjustment.  
MedPAC also assessed the extent to which factors such as disability status and dual-eligibility affect MA plan star ratings.  The Commission discussed several approaches to a more effective application of star ratings to Special Needs Plans, primarily discussing the option of peer grouping of plans based on composition of enrollment (based on income, age, and disability). 

The meeting’s agenda and presentations are available here.  The meeting transcript is available here.