MedPAC Report Explores Opportunities for Medicare Payment Incentives

Stating that “Medicare must change the way it pays healthcare providers … to achieve better care coordination and efficiency,” MedPAC recently released a report to Congress discussing “opportunities” for modifying Medicare payment incentives toward “rewarding value not volume.” The MedPAC report, which offers no recommendations for Congress to follow (1) outlines alternatives for organizing care and changing practice patterns through “Accountable Care Organizations” (ACOs), comprised of primary care physicians, specialists and at least one hospital and held responsible for a beneficiary group’s Medicare spending and quality of care; (2) explores medical education incentives for aligning curricula with the objectives of a reformed delivery system; (3) discusses the “rapid growth of costly imaging services” and concludes that “when physicians have a financial interest in imaging equipment, they are more likely to order imaging tests and incur higher overall spending on their patient’s care”; (4) addresses the need to create price competition among biologic products; and (5) reports on policy options for reducing payments to MA plans—saying that Medicare is paying $12 billion more for beneficiaries enrolled in MA plans than it would have spent under traditional fee-for-service Medicare. The report and accompanying fact sheet may be accessed through the MedPAC website.

Underscoring the importance of MedPAC’s role in reforming the healthcare system, President Obama recently told the American Medical Association that “In recent years, this commission [MedPAC] proposed roughly $200 billion in savings that never made it into law. These recommendations have now been incorporated into our broader reform agenda, but we need to fast-track their proposals, the commission’s proposals, in the future so that we don’t miss another opportunity to save billions of dollars, as we gain more information about what works and what doesn’t work in our healthcare system.” Also as discussed in the June 11, 2009, issue of the Health Law Update, Sen. Jay Rockefeller (D-W. Va.) has introduced legislation to provide MedPAC with the authority to independently decide and implement Medicare reimbursement policy.