The Medicare Payment Advisory Commission (MedPAC) met in Washington, DC on November 6-7, 2019. The Commission continued a discussion on redesigning the Medicare Advantage (MA) quality bonus program (QBP).
Redesigning the Medicare Advantage (MA) quality bonus program (QBP): Initial modeling of a value incentive program
The Patient Protection and Affordable Care Act (ACA) requires CMS to make QBP payments to MA plans that achieve at least four stars out of a possible five in the quality rating system. The ACA further mandates that the level of rebate received by MA plans is tied to that plans QBP star rating. Thus, QBP star ratings have a direct impact on the amount CMS pays plans.
In their presentation to commissioners, MedPAC staff identified flaws in the current program. Primarily, in their view, it is impossible to appropriately judge MA quality and how these MA plans compare to one another. Second, beneficiaries do not have the tools to receive accurate information about MA quality in their geographic area. Additionally, it is difficult to adequately compare MA and fee for service (FFS) quality. Finally, the QBP adds nearly $6 billion dollars per year to overall program costs.
MedPAC staff presented their proposal for re-structuring the QBP. The proposal included transitioning to a smaller set of quality measures, evaluating quality at the local market level, measuring quality against a scale that is known ahead of time, and using peer group mechanisms to account for differences in enrollee’s social risk factors.
Commissioners discussed the relevant differences between using national data or local data to compare quality measures. Specifically, there was some concern that using national data may miss some important distinctions in rural markets.
In January, MedPAC staff will return with a set of policy options incorporating suggestions and guidance from the Commission.
Presentation slides are available here.
Reforming the benchmarks in the Medicare Advantage payment system
MedPAC also discussed reforming MA benchmarks. MedPAC and others have identified issues with the current benchmarks in the MA program. MedPAC staff presented three alternatives to reform benchmarks in MA plans all with average benchmarks set at 98%. Commissioners discussed the impact of the presented proposals on MA plans and local communities, as well as suggested alternative plans.
Historically, Medicare has paid private plans high rates relative to FFS. In 2010, the ACA brought MA payments closer to FFS rates. Despite this change, the Medicare program sees no savings based on MA. MedPAC has concluded that reform is needed to increase efficiency in the program and realize Medicare savings.
In order for Medicare to pay MA plans, the plan must first submit a bid for the Medicare benefit package. The bids are then compared with the relative benchmark to determine payments. In the case that the bid is less than the benchmark (almost all plans), the Medicare program will pay the plan a bid plus an additional rebate. Medicare keeps a portion of the difference while beneficiaries get the rest as extra benefits. In the case that the bid is greater than the benchmark (very few plans), the program pays the benchmark and the beneficiary pays the difference.
In their presentation, MedPAC staff identified several issues with the current benchmarks: the quartile system creates cliffs between the quartiles and leads to inequity; the Medicare program is not realizing any savings due to the MA program; and there is a trade-off between geographic equity relative to local FFS and a desire to promote plan participation. MedPAC staff presented three alternatives with average benchmarks equal to 98% of FFS for consideration by the commission.
While commissioners were mostly supportive of the proposed alternatives by MedPAC staff, there was concern about the impact these alternatives may have on rural communities. Most of the commissioners were in favor of the alternative, where all benchmarks are set at 98% of local FFS spending in all areas. Commissioners also discussed the idea of creating a competitive bidding system in which plans could offer standard, enhanced and extra enhanced plans. These plans would increase premiums depending on the benefits offered. There was broad support among commissioners that a similar plan should be discussed further at a future meeting. In January, MedPAC staff will return with a set of policy options incorporating suggestions and guidance from commissioners.
Presentation slides are available here.
Finally, MedPAC discussed post-acute care spending under the Medicare Shared Savings Program. Presentation slides are available here.
The next public meeting is scheduled for December 5-6, 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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