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Advising the Congress on Medicare issues
MedPAC > Meetings > April 13-14, 2023

April 13-14, 2023


MedPAC’s April 2023 public meeting was held virtually via video conference on the GoToWebinar platform.


04/13/2023 . 10:45 am - 11:15 am

Addressing the high prices of drugs covered under Medicare Part B

Staff Contacts:

ISSUE:  Historically, Medicare has had only an indirect influence on how drugs are priced. Medicare has lacked or has not used tools to strike a balance between providing financial rewards for innovation with value and affordability of care for beneficiaries and taxpayers. Medicare also lacks tools to promote price competition among drugs with therapeutic alternatives.

KEY POINTS: In the Commission’s June 2022 report to the Congress and at recent meetings, we have considered alternative approaches for Medicare to address (1) high prices and uncertain clinical evidence for Part B accelerated approval drugs, (2) lack of price competition for drugs with similar health effects, and (3) financial incentives associated with the percentage add-on to Medicare Part B’s payment rate.

ACTION: Commissioners will review and vote on three draft recommendations to address the high prices of drugs covered under Medicare Part B.

04/13/2023 . 11:20 am - 11:50 am

Reforming Medicare’s wage index systems

Staff Contacts:

ISSUE:  Medicare’s prospective payment systems (PPSs) use wage indexes to adjust Medicare base payment rates for geographic differences in labor costs. Because of limitations of the data sources used, the use of broad labor market areas, and the number of wage index exceptions that the Congress and CMS have added over time to the IPPS wage index, Medicare’s PPS wage indexes are inaccurate and inequitable.

KEY POINTS: At recent meetings, commissioners have discussed an alternative wage index method, similar to one recommended by MedPAC in 2007, that would use cross-industry, occupation-level wage data; reflect county-level differences in wages between and within metropolitan statistical areas and statewide rural areas; cap wage index differences across adjacent counties; and have no exceptions. Staff simulations have shown that this method would more accurately reflect geographic differences in market-wide labor costs at the county level, limit variation in wage index values among providers that are competing for labor within a market or in adjacent markets, and be less subject to manipulation.

ACTION: Commissioners will review and vote on a draft recommendation for reforming Medicare’s PPS wage index systems.

04/13/2023 . 11:55 am - 12:25 pm

Aligning fee-for-service payment rates across ambulatory settings

Staff Contacts:

ISSUE:  Medicare payment rates often differ for the same service among ambulatory settings, which include physician offices, ambulatory surgical centers (ASCs), and hospital outpatient departments (HOPDs). These payment variations encourage arrangements among providers that result in the billing of services shifting to the settings with the highest payment rates, thereby increasing total Medicare spending and beneficiary cost sharing.

KEY POINTS: Some ambulatory services cannot be safely provided in freestanding offices or ASCs and should be provided only in HOPDs. However, many other services can be safely provided in multiple settings, and a prudent purchaser should not pay more for those services in one setting than in another. For these services, payment rates could be aligned across the three ambulatory settings to more closely match the payment rate of the lowest cost setting without adversely affecting beneficiaries’ access to care.

ACTION: Commissioners will review and vote on a recommendation for aligning payment rates for select services across the three ambulatory settings.

04/13/2023 . 12:30 pm - 1:00 pm

Mandated report: Evaluation of a prototype design for a post-acute care prospective payment system

Staff Contacts:

ISSUE:  The Congress required that the Commission and the Secretary of Health and Human Services (HHS) develop prototypes for a unified PAC payment system that set payments based on characteristics rather than setting for all PAC providers. The Improving Medicare Post-Acute Care Transformations (IMPACT) Act of 2014 mandated three reports. The first report was completed by the Commission in 2016 and recommended features of a design. The second report was issued by CMS/ASPE in the Department of Health and Human Services (HHS) in July 2022 and included a prototype design. The Commission is required to submit the third report, with recommendations, by June 30, 2023.

KEY POINTS: At recent meetings, Commissioners have reviewed findings showing that a PAC PPS is feasible using currently available data and could establish accurate payment rates, and have considered the companion policies that should accompany a PAC PPS. Implementing such policies would be complex.

ACTION:  Commissioners will discuss the draft report and vote on the draft recommendation.

04/13/2023 . 2:15 pm - 3:40 pm

Assessing postsale rebates for prescription drugs in Medicare Part D

Staff Contacts:

ISSUE:  The final amounts that Part D plans pay for their enrollees’ prescriptions are often lower than the prices charged at the pharmacy counter, because the plans’ sponsors and their pharmacy benefit managers negotiate rebates and discounts (referred “direct and indirect remuneration” or DIR) from drug manufacturers and pharmacies that are applied after a prescription is dispensed. The use of rebates and discounts has risen sharply over the last decade, concurrent with growth in prices at the pharmacy, resulting in higher cost sharing for some enrollees.

KEY POINTS:  The Consolidated Appropriations Act, 2021, granted the Commission access to the DIR data collected by CMS to administer the Part D program. In 2022, the Congress passed the Inflation Reduction Act of 2022 (IRA), which included numerous policies related to prescription drugs that are likely to alter the drug-pricing landscape and may affect the use of rebates.

ACTION:  Commissioners will review and discuss findings from ongoing analyses of the DIR data. These findings will serve as a baseline for comparison as IRA-mandated changes are implemented.

04/13/2023 . 3:45 pm - 5:00 pm

Assessing the need for Medicare safety net payments for skilled nursing facilities and home health agencies

Staff Contacts:

ISSUE:  The Commission recently undertook a body of work to examine whether Medicare should provide safety-net payments to providers that care for low-income Medicare beneficiaries to ensure access to care.

KEY POINTS: Medicare’s current payment systems for skilled nursing facilities (SNFs) and home health agencies (HHAs) do not include adjusters for beneficiaries’ low-income status. Medicare is a profitable and preferred payer in the SNF and HHA sectors.

ACTION:  Commissioners will discuss findings from an analysis of the relationship between SNF and HHA low-income beneficiary volume and financial performance under Medicare.

04/14/2023 . 9:00 am - 10:25 am

Mandated report: Telehealth in Medicare

Staff Contacts:

ISSUE:  Historically, Medicare’s physician fee schedule has covered a limited set of telehealth services in rural locations. During the COVID-19 public health emergency (PHE), the Congress and CMS temporarily expanded Medicare’s coverage of telehealth services and increased payment rates for them. The Consolidated Appropriations Act, 2021, requires the Commission to submit a report by June 2023 on the use of telehealth services during the PHE, the impact of expanded telehealth coverage on access and quality, and Medicare payment policy for telehealth services.

KEY POINTS: In our March 2021 report to the Congress, the Commission presented a policy option for the Congress and CMS to temporarily continue some of the telehealth expansions to gather more evidence of their impact on access, quality, and cost. At recent meetings, the Commission has continued to assess the use of telehealth services during the PHE and discuss alternative approaches for payment.

ACTION:  Commissioners will review and discuss additional findings and provide feedback on the draft report.

04/14/2023 . 10:30 am - 12:00 pm

Congressional request: Behavioral health in Medicare

Staff Contacts:

ISSUE:  In January 2022, the Chairman of the House Committee on Ways and Means requested that the Commission broadly analyze behavioral health services under the Medicare program. A report is due no later than June 15, 2023.

KEY POINTS: Last September, the Commission discussed trends and issues in inpatient psychiatric care for beneficiaries, including information on the adequacy of Medicare’s payment rates and the relative lack of information about the quality of care provided to beneficiaries. In January, commissioners discussed findings on beneficiaries’ use of clinician and outpatient behavioral health services, including tele-behavioral health services.

ACTION:  Commissioners will review and discuss updated findings and provide feedback on the draft report.