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MedPAC Continues Work on Part D Redesign, Unified PAC Payment System and Discusses Population-based Outcome Measures

October 10, 2019

McDermott+Consulting

The Medicare Payment Advisory Commission (MedPAC) met in Washington, DC on October 3-4, 2019. The Commission continued the discussion on a variety of innovation topics including restructuring Part D, the development of a unified post-acute care (PAC) payment system and they discussed population-based outcome measures.

Restructuring Medicare Part D

In response to rising drug prices, MedPAC joins the Trump Administration and the Senate Finance Committee in proposing Part D redesign. MedPAC is considering a redesign that does not address drug prices directly but shifts cost responsibility among plans, Medicare and beneficiaries. Specifically, MedPAC is considering a redesign that would: eliminate the coverage-gap discount for manufacturers, implement the same benefit design for enrollees with and without the low-income subsidy, redesign the catastrophic phase of benefits, and lower or eliminate Medicare reinsurance.

The Commission discussed the need for changes in the structure of Medicare Part D while ensuring beneficiary access and overall costs were not compromised, and the extent to which different payers within Medicare Part D should take on risk. MedPAC will present their recommendations on restructuring Medicare Part D benefits in their June 2020 report to Congress. Presentation slides for this session are available here.

Aligning benefits and cost-sharing under a unified PAC payment system

MedPAC continued previous discussions around aligning the various PAC prospective payment systems (PPS) across settings. Home health agencies, skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals comprise the different settings considered under the PAC PPS.

The focus of the discussion at the October 2019 meeting was if a prior hospital stay should be required across all settings, if there should be a uniform limit of days covered across settings, and a uniform approach to co-payments across settings. While the Commission was generally supportive of aligning cost-sharing across PAC settings, the Commissioners were unable to come to a consensus about which benefits, if any, should be applied uniformly across PAC settings. Presentation slides are available here.

Population-based outcome measures: Avoidable hospitalizations and emergency department visits

As a part of the Commission’s efforts to evaluate the quality of care and align incentives across the Medicare program, MedPAC staff presented an analysis of avoidable hospitalizations and emergency department (ED) visits for the fee-for-service population. Commissioners discussed but did not come to a consensus if avoidable hospitalizations and emergency department visits would be appropriate for use in the development of population-based outcome measures.

The Commission determined more work needs to be done to fully understand what an “avoidable” hospitalization or ED visit is and what the appropriate preventive measures are. The Commission requested that MedPAC staff evaluate potential differences between hospitals with the lowest and highest rates of avoidable hospitalizations and ED visits to identify best practices in reducing unnecessary care. Presentation slides for this session are available here.

The next public meeting is scheduled for November 7-8, 2019.

MedPAC is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the US Congress on issues affecting the Medicare program. More information on MedPAC is available on their website.

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For more information visit the McDermottPlus Payment Innovation Resource Center or contact Kelsey Haag at 202-204-1464/khaag@mcdermottplus.com or Sheila Madhani at 202-204-1459/smadhani@mcdermottplus.com.

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