Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - MedPAC 101

3. Sponsor Snapshot 🚀 - brought to you by Adsync Media

4. Compliance Chatter 📢 - PACKED with updates!

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

MedPAC 101

If you’ve been in the Medicare industry for a while, you may have heard someone reference “the MedPAC report” and thought… “MedPAC?” Never heard of it.

Or, maybe you’re a big nerd and get excited when someone mentions MedPAC because you read the MedPAC reports every year.

Either way, in today’s deep dive we are providing an overview of MedPAC.

Why?

MedPAC provides data driven analysis and advice to Congress that often gets pulled into policies and regulations. So knowing and understanding MedPAC’s recommendations can help you get ahead of possible future changes to the Medicare program.

What is MedPAC?

The Medicare Payment Advisory Commission (MedPAC) is an independent, non-partisan body established by Congress in 1997. Its primary function is to provide expert advice to Congress on Medicare’s payment policies and the overall performance of the program. MedPAC plays a critical role in shaping the policies that guide the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for administering Medicare.

This summary explores MedPAC’s mission, structure, and functions, highlighting how it helps CMS develop new policies and improve Medicare’s sustainability, equity, and effectiveness.

Background and Mission of MedPAC

MedPAC was created by the Balanced Budget Act of 1997 in response to concerns about the rising costs of Medicare and the need for more effective and efficient administration.

Its mission is to advise Congress on Medicare policy, focusing on improving the program’s payment systems and ensuring that Medicare can meet the healthcare needs of its beneficiaries while controlling costs. The Commission provides data-driven analyses and recommendations regarding payment rates, the effectiveness of delivery systems, the quality of care, and the long-term financial stability of Medicare.

MedPAC’s primary objectives are to identify inefficiencies within Medicare’s payment policies and to propose reforms. It considers a range of factors in its analyses, including the quality of care, costs to beneficiaries, the financial impact on healthcare providers, and the overall sustainability of Medicare.

While it does not have regulatory authority, MedPAC’s recommendations are highly influential in shaping Medicare policy.

Structure of MedPAC

MedPAC consists of 17 members, who are appointed by the U.S. Comptroller General.

Members are selected based on their expertise in health policy, economics, healthcare delivery, and the workings of the Medicare system. The composition of the Commission is designed to bring together individuals with diverse perspectives, including economists, healthcare providers, consumer advocates, and policy analysts.

The Commission is led by an executive director, and its members serve on a non-partisan basis, meaning they do not represent the interests of specific political parties. This non-partisan structure enables MedPAC to conduct objective analyses and offer recommendations that are focused solely on improving Medicare’s performance.

Role in Advising Congress and CMS

MedPAC’s primary responsibility is to advise Congress on Medicare policy. Each year, MedPAC submits two reports to Congress: one in March and another in June.

→ The March report focuses on Payment Policy and June report looks at the Health Care Delivery System.

These reports provide detailed recommendations on various aspects of Medicare, including payment rates for providers, changes to the structure of the program, and potential reforms. Links to historical reports are available here.

While MedPAC is an advisory body to Congress, its work also plays a critical role in the development of policies by CMS. Although CMS has its own internal policy-making processes, MedPAC’s recommendations are often considered when CMS develops new policies or revises existing ones.

This collaboration between MedPAC and CMS helps ensure that the policies implemented under Medicare are evidence-based and aligned with long-term goals of reducing costs while improving quality.

How MedPAC Influences CMS Policy Development

MedPAC influences the development of CMS policies in several ways, including through direct recommendations, comprehensive reports, and in-depth analyses. The relationship between MedPAC and CMS is symbiotic—MedPAC provides evidence-based, expert recommendations to guide CMS, and CMS often incorporates these insights into its decision-making processes.

1. Data-Driven Recommendations: MedPAC’s analyses rely heavily on data to evaluate the effectiveness and cost-efficiency of current Medicare policies. For example, MedPAC regularly reviews payment rates for various healthcare providers and evaluates whether they align with the actual cost of providing services. These recommendations may include suggested changes to reimbursement rates or payment structures to align with the goals of promoting high-quality, cost-effective care.

2. Assessing Medicare’s Payment Systems: One of MedPAC’s core functions is to analyze the payment systems used by CMS to reimburse healthcare providers. The Commission regularly assesses how Medicare pays for services across different settings, such as hospitals, skilled nursing facilities, and outpatient care. MedPAC identifies discrepancies or inefficiencies in these systems and proposes alternative models that could improve the overall functioning of Medicare. These insights can help CMS update its payment structures, such as adjusting reimbursement rates for different providers or exploring bundled payment models.

   For example, MedPAC recently recommended changes to the way Medicare reimburses for hospital outpatient services. After reviewing payment rates and healthcare outcomes, MedPAC suggested that CMS adopt more value-based payment models to incentivize higher quality care and reduce unnecessary spending[1].

3. Focus on Quality of Care: In addition to financial considerations, MedPAC emphasizes the importance of improving the quality of care within Medicare. The Commission assesses the effectiveness of care delivered across different parts of the Medicare program, including both managed care plans and traditional fee-for-service arrangements. MedPAC’s recommendations help CMS to shape policies that incentivize providers to improve care quality and address health disparities among beneficiaries. For example, MedPAC has advocated for strengthening quality measurement programs in Medicare, which can help guide payment decisions and ensure that payments are linked to outcomes.

4. Analysis of New Delivery Models: MedPAC is often at the forefront of evaluating and recommending innovative delivery models aimed at improving both the quality and cost-efficiency of Medicare. CMS has adopted several of these models, such as Accountable Care Organizations (ACOs) and bundled payment programs, in its effort to promote value-based care. MedPAC regularly analyzes the impact of these new models on Medicare spending and beneficiary outcomes, offering recommendations on how these models can be refined to improve their effectiveness. CMS uses MedPAC’s analysis to determine whether to expand or modify these delivery models across different regions or provider types.

5. Long-Term Sustainability of Medicare: Another crucial area of MedPAC’s work is ensuring the long-term sustainability of Medicare, particularly in light of the aging U.S. population and increasing healthcare costs. The Commission provides regular analyses of the financial health of Medicare, including projections about future spending and the solvency of the Medicare trust funds. These analyses often inform CMS’s efforts to control costs while maintaining access to high-quality care for beneficiaries. MedPAC also offers recommendations on adjusting benefits, premiums, and cost-sharing mechanisms to ensure that Medicare remains financially viable.

6. Recommendations on Policy and Legislative Proposals: MedPAC’s influence on CMS also extends to its role in assessing and offering recommendations on specific policy or legislative proposals that may affect Medicare. For example, if Congress proposes new healthcare policies, such as changes to Medicare Advantage or the introduction of new benefits for beneficiaries, MedPAC evaluates these proposals’ potential impact on Medicare’s costs, quality, and long-term stability. MedPAC’s input helps CMS and Congress understand the potential consequences of new policies, which can guide decision-making and legislative amendments.

Conclusion

MedPAC plays a crucial role in advising Congress and influencing policy development within CMS.

Through its non-partisan, data-driven analysis, the Commission helps ensure that Medicare policies promote high-quality, cost-effective care while addressing the program’s long-term financial sustainability. By focusing on payment systems, delivery models, quality of care, and Medicare’s overall viability, MedPAC helps shape CMS’s approach to reforming and improving Medicare.

As healthcare costs continue to rise, MedPAC’s work is vital to ensuring that Medicare remains a robust program that can meet the needs of current and future beneficiaries while controlling costs and enhancing care quality.

It will be interesting to see if/how the Department of Government Efficiency (“DOGE”) will interact with MedPAC to recommend cost savings in Medicare.

[1] Medicare Payment Advisory Commission. 2023. Report to the Congress: Medicare Payment Policy Chapter 2

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