By law, the Medicare Payment Advisory Commission reports to the Congress each March on the Medicare fee-for-service (FFS) payment systems, the Medicare Advantage (MA) program, and the Medicare prescription drug program (Medicare Part D).
In this year’s report, we consider the context of the Medicare program, including the near-term consequences of the coronavirus pandemic and the longer-term effects of program spending on the federal budget and the program’s financial sustainability. We evaluate payment adequacy and make recommendations concerning Medicare FFS payment policy in 2024 for seven FFS payment systems: acute care hospital, physician and other health professional, outpatient dialysis facility, skilled nursing facility, home health agency, inpatient rehabilitation facility, and hospice services. We also include recommendations to redistribute current disproportionate share hospital and uncompensated care payments, and to provide additional resources to Medicare safety-net hospitals and clinicians who furnish care to Medicare beneficiaries with low incomes. Previously, the Commission also considered an annual update recommendation for long-term care hospitals (LTCHs). But as the number of cases that qualified for payment under Medicare’s prospective payment system for LTCHs declined, we became increasingly concerned about small sample sizes in our analyses of this sector. As a result, we will no longer provide an annual payment adequacy analysis for LTCHs but will continue to monitor that sector and provide periodic status reports. The Commission also previously considered an annual update recommendation for ambulatory surgical centers (ASCs). However, because Medicare does not require ASCs to submit data on the cost of treating beneficiaries, we have no new significant data to inform an ASC update recommendation for 2024 and thus decided to provide a status report on ASCs instead of an update recommendation. We also review the status of the MA program (Medicare Part C) through which beneficiaries can join private plans in lieu of traditional FFS Medicare. Finally, we review the status of the Medicare program that provides prescription drug coverage (Medicare Part D).