MedPAC Recommends Elimination of $10 Billion Fund for Regional Preferred Provider Organizations
The 17-member Medicare Payment Advisory Commission on Thursday voted to adopt a draft recommendation that lawmakers eliminate a $10 billion fund for Medicare regional preferred provider organizations, CQ HealthBeat reports. The fund, established by the new Medicare law, seeks to provide health plans with incentives to participate in the program after "several years of upheaval" in which many plans ended their participation, according to CQ HealthBeat.
MedPAC said that the recommendation would not result in savings until 2007, when Medicare will distribute the fund. At that point, the recommendation would result in savings of $1 billion to $5 billion over five years, according to MedPAC.
MedPAC also issued several other recommendations:
- Hold-harmless policy: According to MedPAC, "Congress should put in law the scheduled phaseout of the hold-harmless policy that offsets the impact of risk adjustment on aggregate payments through 2010." The recommendation would result in savings of $1.5 billion over one year and more than $10 billion over five years.
- "Indirect medical education" payments: MedPAC recommended that Medicare should remove such payments, which are made to teaching hospitals, from calculations used to determine payments to managed care plans. The recommendation would result in savings of $200 million to $600 million over one year and $1 billion to $5 billion over five years.
- Benchmark payments: MedPAC said that Congress should establish benchmark payments to Medicare Advantage plans at 100% of the cost of fee-for-service Medicare. The recommendation would result in savings of $1.5 billion over one year and $10 billion over five years.
- Quality: MedPAC recommended that fee-for-service Medicare include quality measures to allow comparison with Medicare Advantage plans.
- Geographic regions: MedPAC recommended the expansion of geographic regions used to determine payment rates for Medicare Advantage plans. The current system bases the regions on counties.
According to CQ HealthBeat, the MedPAC recommendation to eliminate the $10 billion fund for Medicare regional PPOs "surprised many observers." The "possibility that Congress would vote to make at least some of the cuts can't be ruled out," as lawmakers are "under pressure" to reduce the federal budget deficit, CQ HealthBeat reports. Congress has the authority to decide whether and when to implement the MedPAC recommendations.
MedPAC said that the recommendations could prompt fewer health plans to participate in Medicare Advantage, which would result in fewer coverage options for beneficiaries. However, MedPAC said that "managed care plans ought to compete on a level playing field" with fee-for-service Medicare, CQ HealthBeat reports. MedPAC Chair Glenn Hackbarth said that implementation of the recommendations "could not happen today without massive disruption to the system."
Mohit Ghose, a vice president of public affairs for America's Health Insurance Plans, said that Congress should not "revisit such a monumental piece of legislation at a time when it is being implemented to fulfill congressional intent, which is more plan choices and better benefits for beneficiaries," adding, "Even MedPAC's own impact analysis shows that the recommendations would reduce the number of beneficiary choices and the number of plans" (CQ HealthBeat, 4/21).