The Medicare Payment Advisory Commission (MedPAC) made a number of recommendations to Congress on payment updates for the coming year and once again stridently urged a repeal of the sustainable growth rate formula (SGR) that has plagued the program for more than 10 years.
Based on its payment adequacy analyses, MedPAC has recommended no update for 2014 for five fee-for-service (FFS) payment systems and a 1 percent update for the hospital inpatient and outpatient payment systems, among the key points in its March 2013 Report to the Congress: Medicare Payment Policy released Friday.
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For two sectors, skilled nursing facilitiesy/nursing-allied-health" target="_blank" class="directory-item-link">nursing facilities and home health agencies, it held steady to previous recommendations calling for a number of reforms including rebasing or lowering the base rate, creating incentives to improve quality, and increasing program integrity.
For the physician and other health professional payment system, MedPAC continued to press for the repeal of the sustainable growth rate system (SGR), which governs physician fee schedule payments.
"The need to repeal the SGR is urgent. Deferring repeal of the SGR will not leave the Congress with a better set of choices, as the array of new payment models is unlikely to change in the near-term, and SGR fatigue is increasing," the report said.
The Congressional Budget Office's most recent projections have substantially lowered the budget score for SGR repeal and may offer an opportunity for the Congress to act. However, the budget score is "volatile," in that it depends on the relationship between growth in the volume of services and growth in the nation's economy, the report said.
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In each of the last three decades there have been periods of rapid volume growth and periods of slower growth.
SGR has not restrained volume growth, and the deep cuts called for by the SGR formula, combined with temporary stop-gap fixes, have undermined beneficiaries' and providers' confidence in Medicare, according to the report. MedPAC proposed to Congress in 2011 to repeal the SGR and replace with legislated updates that would no longer be based on an expenditure-control formula.
The scheduled updates would favor primary care over specialty services to help correct the undervaluation of primary care.
Medicare is likely to use the FFS payment systems for a number of years until new models are established. This fact alone makes unit prices an important topic.
"Constraining unit prices could create pressure on providers to control their own costs and to be more receptive to new payment methods and delivery system reforms," the report said.
MedPAC also reported that Medicare Advantage benchmarks and plan payments have moved closer to fee-for-service levels, which is important in order to impose fiscal pressure on providers to improve efficiency and reduce Medicare program costs. MedPAC has recommended that the payment system be neutral, not favoring either MA or the traditional FFS program.
Premiums for the Part D prescription drug program have remained steady, as average cost in 2013 are also anticipated to be stable.
However, Part D plan sponsors are expecting significant changes in costs for individual components, including a decrease for the direct subsidy and an increase for the reinsurance component, according to the report.
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