MedPAC on MA: ‘Major overhaul’ needed 

WASHINGTON – When accounting for favorable selection of enrollees in Medicare Advantage and higher coding intensity, Medicare spends approximately 22% more for MA enrollees than for FFS Medicare enrollees, a difference that translates into a projected $83 billion in 2024, according to an annual report from the Medicare Payment Advisory Committee (MedPAC). 

Additionally, premiums will be about $13 billion higher in 2024 because of higher MA spending, according to MedPAC’s “2024 Report to the Congress: Medicare Payment Policy.” 

MedPAC says a “major overhaul” of MA is needed for several reasons. 

1. Beneficiaries lack meaningful quality information when choosing among MA plans. 

2. Medicare is paying more for MA than for comparable beneficiaries in FFS Medicare. 

3. The disparity between MA and FFS payment disadvantages beneficiaries who—for medical reasons or personal preferences—do not want to enroll in MA plans that use tools like provider networks or utilization management policies and instead want to remain in FFS (which includes care provided through alternative payment models). 

4. The lack of information about the use and value of many MA supplemental benefits prevents meaningful oversight of the program such that we cannot ensure that enrollees are getting value from those benefits. 

5. The continued growth in MA will increasingly create challenges for benchmark setting because beneficiaries remaining in FFS may be higher risk (and thus have higher spending) in ways that risk adjustment cannot adequately capture. 

Over the past few years, MedPAC has made several recommendations to improve MA, including addressing coding intensity, replacing the quality bonus program, establishing more equitable benchmarks, and improving the completeness of MA encounter data. 

In addition to MA, MedPAC makes assessments and recommendations for hospital inpatient and outpatient services, physician and other health professionals services, outpatient dialysis services, skilled nursing facility services, home health care services, inpatient rehabilitation facility services, hospice services, ambulatory surgical center services and Medicare Part D. 

MedPAC only mentions durable medical equipment once: 

“The waiver of some of Medicare’s rules during the pandemic may have increased the risk of fraudulent Medicare claims. For example, CMS modified its provider enrollment screening process during the pandemic by waiving fingerprint-based criminal background checks for provider types that pose a high risk for fraud, waste, and abuse. After seeing a spike in enrollments by suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), which is a provider type CMS considers to pose a moderate or high risk for fraud, waste, and abuse, CMS reintroduced these requirements in July 2020. It also revoked enrollments for providers found to be ineligible to participate in Medicare—83 percent of whom were DMEPOS suppliers (Government Accountability Office 2022).” 

• To read the entire 561-page report, go here. 
• To read the executive summary, go here.