On April 2, 2020, the Medicare Payment Advisory Commission (MedPAC) held its monthly meeting via a closed session videoconference, due to the coronavirus outbreak. Topics discussed at the meetings included: value-based payment in Medicare; challenges in maintaining and increasing savings from accountable care organizations (ACOs); realigning incentives in Medicare Part D; redesigning the Medicare Advantage quality bonus program; and how to improve Medicare’s end-stage renal disease prospective payment system.
Realizing the Promise of Value-Based Payment in Medicare
During the meeting, MedPAC reviewed the draft chapter outlining its priorities for value-based payment.
MedPAC Principal Policy Analyst Eric Rollins reviewed key goals and principles for achieving value-based payment in Medicare, noting that the chapter includes information on the shortcomings of traditional Medicare fee-for-service (FFS).
In reviewing the goals and principles, Commissioners expressed their support for the goals outlined in the draft chapter and suggested revisions that would amplify the importance of accounting for the needs of beneficiaries and the impact of innovative health care delivery services such as telehealth. They also agreed on modifying the chapter to include a list of pros and cons for moving past FFS into value-based payments, as they had varying levels of agreement as to what approach should be taken moving forward.
Challenges in Maintaining and Increasing ACO Savings
In the second session, Commissioners discussed recommendations surrounding ACOs. MedPAC Principal Policy Analysts David Glass and Jeff Stensland, Ph.D. with Senior Analyst Luis Serna presented the draft recommendation. They noted that there were 517 ACOs responsible for 11.2 million beneficiaries in 2020 and that MedPAC found slower spending growth for beneficiaries assigned to an ACO in 2013 relative to a counterfactual. They noted that there is potential patient selection in the Medicare Shared Savings Program (MSSP), of which ACOs are the largest part. Savings are small at the outset, they noted, and unwarranted shared savings payments to ACOs could put savings at risk. Staff said that using national provider identifier (NPI) for computing ACO benchmarks may reduce unwarranted shared savings and would most accurately capture historical spending.
The draft recommendation discussed – and approved by the Commissioners – was for the Secretary to use the same set of National Provider Identifiers (NPI) to compute both performance year and baseline assignment for ACOs in the Medicare Shared Savings Program (MSSP).
Realigning Medicare Part D Incentives
Commissioners also discussed recommendations for restructuring Medicare’s prescription drug benefit. The three recommendations, presented by Principal Policy Analysts Shinobu Suzuki, Rachel Schmidt, Ph.D., and Eric Rollins, are:
Draft Recommendation #1: Congress should make the following changes to the Part D prescription drug benefit:
- Below the out-of-pocket threshold:
- Eliminate the initial coverage limit.
- Eliminate the coverage-gap discount program.
- Above the out-of-pocket threshold:
- Eliminate enrollee cost sharing.
- Transition Medicare’s reinsurance subsidy from 80 percent to 20 percent
- Require pharmaceutical manufacturers to provide a discount equal to no less than 30 percent of the negotiated price for brand drugs, biologics, biosimilars, and high-cost generic drugs.
Draft Recommendation #2: Concurrent with the recommended changes above in Draft #1, Congress should:
- Establish a higher copayment amount under the low-income subsidy for nonpreferred and nonformulary drugs.
- Give plan sponsors greater flexibility to manage the use of drugs in the protected classes.
- Modify the program’s risk corridors to reduce plans’ aggregate risk during the transition to the new benefit structure.
Draft Recommendation #3: Concurrent with the recommended changes above, the Secretary should:
- Allow plans to establish preferred and nonpreferred tiers for specialty-tier drugs.
- Recalibrate Part D’s risk adjusters to reflect the higher benefit liability that plans bear under the new benefit structure.
The Commissioners voted to approve these recommendations – all Commissioners voted in favor, with the exception of Commissioner Pat Wang, JD, of Healthfirst, who abstained.
Redesigning the Medicare Advantage Quality Bonus Program
During this session, Commissioners reviewed a draft recommendation to replace the Medicare Advantage (MA) Quality Bonus Program (QBP) with the MA-VIP program. As proposed, the MA-VIP program would: score a small set of population-based measures; evaluate quality at the local market level; use a peer grouping mechanism to account for differences in enrollees’ social risk factors; establish a system for distributing rewards with no “cliff” effects; and distribute plan-financed rewards and penalties at a local market level.
MedPAC Senior Analysts Ledia Tabor and Andy Johnson, Research Assistant Sam Bickel-Barlow, and Carlos Zarabozo reiterated that reform of the QBP is urgently needed. The presented the draft recommendation, which is that Congress replace the current MA QBP with a new value incentive program that: Scores a small set of population-based measures; Evaluates quality at the local market level; Uses a peer grouping mechanism to account for differences in enrollees’ social risk factors; Establishes a system for distributing rewards with no “cliff” effects; and Distributes plan-financed rewards and penalties at a local market level.
Commissioners voted unanimously to approve the recommendation, and some commented on evaluating the impact on Part D quality measures and increasing transparency by adding national quality reporting.
Improving Medicare’s End-Stage Renal Disease Prospective Payment System
Finally, the Commission reviewed two draft recommendations aimed at improving Medicare’s payments for dialysis service.
MedPAC Principal Policy Analyst Nancy Ray and Senior Analyst Andy Johnson, Ph.D. presented the recommendations to the Commissioners.
Draft Recommendation #1: Congress should direct the Secretary to eliminate the end-stage renal disease (ESRD) prospective payment system’s transitional drug add-on payment adjustment for new drugs in an existing ESRD functional category.
Draft Recommendation #2: The Secretary should replace the current low-volume and rural payment adjustments in the ESRD prospective payment system with a single adjustment for the dialysis facilities that are isolated and consistently have low volume, where low volume criteria are empirically-derived.
The Commissioners unanimously approved both recommendations.