Advisory Committee Pushes Medicare Payment Changes
The Medicare Payment Advisory Commission on Friday sent a June report to Congress that recommended equalization of reimbursement rates for private Medicare Advantage plans and the fee-for-service program, CQ HealthBeat reports. According to the report, the current MA plan reimbursement system does not promote increased efficiency in health care delivery and outcomes in large part because county benchmarks -- the basis of payment rates for the plans -- exceed fee-for-service expenditure levels.
County benchmarks averaged 116% of expected fee-for-service expenditure levels in 2006, and those benchmarks allowed MA plans to offer extra benefits to attract Medicare beneficiaries, many of whom enrolled in private fee-for-service plans, the report said.
"PFFS plans are providing extra benefits because of the higher payment rates, not because of greater efficiency," according to the report (Carey, CQ HealthBeat, 6/15).
The report said that Congress could blend county benchmarks with expected fee-for-service expenditure levels to determine reimbursement rates for MA plans, with increased weight toward fee-for-service expenditure levels in each subsequent year, to equalize payment rates over time. "For example, in the first year, the blend could be 80% historical and 20% FFS. In year two, the weighting could be changed to 60/40, and so on," the report said.
In addition, the report said that Congress could "freeze the private fee-for-service plans' benchmarks until traditional Medicare fee-for-service plans catch up, cap the benchmark at a rate that increasingly moves closer to traditional Medicare spending and use competition to set benchmarks based on an average of bids," CongressDaily reports (Edney, CongressDaily, 6/15).
The report also recommended the establishment of a home health care pay-for-performance system in Medicare and an independent entity that would sponsor research on the comparative effectiveness of health care services. In addition, the report recommended implementation of a measure to encourage hospitals to seek to reduce readmissions and a repeal of the current hospital wage index (CQ HealthBeat, 6/15).
The report is available online. Note: You must have Adobe Acrobat Reader to view the report.