MedPAC Discusses Changes to Medicare Advantage Payment System

by King & Spalding

On October 8 and 9, 2015, the Medicare Payment Advisory Commission (MedPAC) held its second meeting of the 2015-2016 session.  Commissioners met to examine ways to improve the Medicare Advantage (MA) payment system, including whether the use of health risk assessments (HRAs) should be limited, and whether obstacles facing the new Merit-Based Incentive Payment System (MIPS) for physician payments will prove overly burdensome. 


While HRAs are a preventative tool to identify health risks, MedPAC is concerned about their use in determining plan payments.  Specifically, MedPAC is concerned that MA risk scores are higher than those of fee-for-service (FFS) beneficiaries, thus increasing MA plan costs.  The commissioners discussed whether chronic conditions found during HRAs should be excluded from MA plans’ risk scores.  The commissioners also discussed CMS’s concern about the differences in diagnostic coding intensity—that the costs for MA enrollees increase faster over time than for FFS beneficiaries. 

Senior Analyst Andrew Johnson presented two options for addressing the issue of MA risk scores registering about 8 percent higher than those in the FFS payment model: (1) that certain diagnoses found in risk assessments be excluded from use in either MA or FFS risk adjustments, and (2) to use two years of data for risk adjustment instead of one year.  Some of the commissioners expressed doubts about these options, stating that adjusting the MA plan adjustments could result in disincentives for plans to offer the preventative care that MedPAC wants to encourage. 

MedPAC principal policy analyst Scott Harrison offered an analysis of the inequities in the MA payment system, which include the “double quality bonus” and the “benchmark caps,” suggesting that both the benchmark caps and the double bonus be eliminated.  Harrison estimated that 19 percent of enrollees are in double bonus counties and 19 percent are in capped counties.  According to Harrison, eliminating both would simplify the MA payment system and equal a savings of $197 million for 2016.

New DoctorPayment System

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) established a new physician payment methodology to repeal the sustainable growth rate (SGR).  At its October meeting, MedPAC expressed concerns that MIPS may be too burdensome and difficult.  Additionally, commissioners are concerned that MACRA’s emphasis on physician participation in alternative payment models (APMs) may have limited success due to strict eligibility criteria, such as meaningful use of a certified electronic health record. 

MedPAC senior analyst Catherine Bloniarz presented concerns about the difficulty of measuring and evaluating individual clinicians’ performances under MIPS, noting that current quality programs do not effectively assess outcomes.  Commissioners were also concerned with the new system allowing dual participation in MIPS and APMs, and expressed a similar worry about the complexity of the transition.  Also discussed was participation in both MIPS and APMs and the uncertainty of whether physicians would switch between MIPS and APMs each year.  The commission further discussed the statutory requirement that APMs use comparable quality measures to MIPS.  MedPAC principal policy analyst David V. Glass said that, because of the five percent payment bonus and higher updates starting in 2026, “there will be strong interest among clinicians to be considered qualified APM participants.” 

On October 1, 2015, CMS published a Request for Information seeking stakeholder input in how to develop the MIPS.  CMS is not expected to publish an initial MIPS rule until 2016.  CMS’s Request for Information can be found here.

Reporter, Katy Lucas, Atlanta, + 1 404 572 2822,

Written by:

King & Spalding

King & Spalding on:

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