What is MedPAC and Why Should You Care?

MedPAC: It stands for Medicare Payment Advisory Commission; an independent body set up by Congress in 1997 (a Republican Congress) to monitor the Medicare, a federal insurance program. The 17-member MedPAC makes recommendations to Congress about how much doctors and hospitals should be paid for the services they provide. These are the people telling us that Medicare paid 14% less than the Medicare Advantage plans you keep hearing about.
Who are they?

Meet them here: http://www.medpac.gov/commission.cfm

More about them?

Currently, Congress decides what Medicare will pay hospitals and health care providers, and then puts it in law.  To find advice on the often complex policy, Congress created MedPAC. Ezra Klein of the WaPo explained it pretty well:  “The commission is staffed by experts who are appointed for three-year terms, and its existence is due to a simple insight: Medicare payment policy is too technical for the Congress. There aren’t five senators with an informed opinion on the “equipment use standard” for imaging machines, much less 50, and much less 100.”

So in other words, MedPAC makes recommendations to Congress but cannot directly affect what Medicare does. Between the time when MedPAC makes their recommendations and Congress writes and passes laws, lawmakers sometimes decide they don’t want to heed the suggestions (potentially sometimes perhaps influenced by lobbyists and campaign contributors?? More on that later.)

To recap some stuff about Medicare you might already have heard, Medicare is generally a fee-for-service program, meaning that physicians and hospitals bill the government for each individual service they provide to Medicare beneficiaries. This unfortunately creates a perverse incentive for doctors and hospitals to conduct more tests and procedures than might be necessary. The fee-for-service model is commonly criticized as a large reason that Medicare spending is rising unsustainably.

In many ways MedPAC can be seen as paving the way for reforms.  They are the ones who suggested pursuing comparative effectiveness research; encouraging primary care by raising fees for family doctors and  other generalists; lowering fees for some specialists; and refusing to cover products and services unless we have medical evidence that they are effective. The Obama Administration is taking MedPAC’s recommendations to heart, and Democrats in Congress see the link between Medicare reform and national health care reform.  Recently they took some time to consider testimony and deliberate on the Primary Care physican shortage that I talked about two weeks ago (http://zikkir.com/med/437?wscr=1280×800)

Most academics and policy experts agree that MedPAC knows what it’s talking about at least some of the time… the real problem is translating that into real change, and getting it past vocal and powerful interest groups.

For example, due to an increased visibility on the huge Medicare costs in places like McAllen Texas, MedPAC recommended accelerated cuts to home health spending in 2010.  This is really upsetting the National Association for Home Care and Hospice.  Read about it here: http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/DN-home_health_23pro.ART0.State.Edition1.4be80f3.html

Additionally, MedPAC is suggesting that there be cuts in payments to Medicare Advantage plans (the subsidized private plans that Medicare beneficiaries can opt for instead of the government-sponsored Medicare coverage. MedPAC says, “Although plans are being paid more, the extra payments do not necessarily result in higher quality of care.” It recommends that Congress “level the playing field” by paying private plans the same it would cost them to offer a comparable plan. Dealing with this issue is proving to be a real stumbling block and obstacle for both the President and Congress. (Read a great oped about this from today in USA Today of all places: http://blogs.usatoday.com/oped/2009/09/debate-on-paying-for-health-reform-part-ii-our-view-how-medicare-advantage-turned-into-a-boondoggle.html)

Piggy-backing on Atul Gawande’s work (http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande), yesterday, the Government Accountability Office (the GAO) issued a report finding that over-prescription of some medical costs are inexplicably higher in some regions of the country.  “[C]ertain types of physician services, such as advanced imaging and minor procedures, are performed more frequently in potentially overserved areas relative to other areas, suggesting differences in physician practice patterns,” GAO found. Senator Baucus has been taking notes.  He says, “The potential abuse and excessive spending revealed in this report is further evidence the status quo of rising health care costs is unacceptable for America’s seniors and the long-term fiscal health of the Medicare program.”

What’s the Solution?

In response to this looming crisis, proposed pieces of legislation have toyed with the idea of building out the capabilities and authority of MedPAC.  Baucus’ proposal is to establish a *new* independent Medicare advisory committee that would have the authority to put these recommendations into policy.   As Maggie Mahar says, “Some have called the advisory committee a MedPAC on steroids (with steroids meaning actual authority to influence Medicare policy).”  In this way, Obama says, ‘MedPAC’s recommendations on cost reductions would be adopted unless opposed by a joint resolution of the Congress.’ and Baucus views it as one of the key provisions that will actually help bend the cost curve over the long run.”

The new commission would do much of the work Congress now does in figuring out both the best way and how much Medicare should pay providers.  In limiting Congress’ role, it would take on some serious influence in its own roles and duties.

For example, it would send proposals to Congress to reduce Medicare spending by targeted amounts if its costs rose faster than the Consumer Price Index (CPI). Congress could then approve the commission proposals, amend them or develop their own as long as they remained under the spending targets.  These spending targets get more and more difficult to meet every few years.  This is a very controversial issue. One thing I can attest to: biotech, pharma and medical device companies haaaaate this.

The HealthBeatBlog said, “These are exactly the radical but truthful recommendations that would make any well-paid health care lobbyist shudder.  No wonder the Bush administration ignored MedPac’s advice for eight years.” Republicans on the Senate Finance Committee tried to get through an Amendment to the reform bill that would eliminate any potential for the Commission to be created, but it got shot down last week.

In Conclusion….

The Commission, as it exists now, is supposed to be independent, and if their mission is altered into actually implementing their recommendations, and ensuring that Medicare become sustainable, then its role is going to become more public and crucial over time, and therefore vulnerable to political pressure.

Congress seems to have realized that they can’t continue to be influenced so blatantly and transparently… and plus this whole reform thing is way above their pay grade.  Why put themselves at political risk when they can hand of the responsibly of making difficult cuts to guys with PhD’s and JDs?  It’s going to get ugly, and they don’t want to be in the middle of it.

Here’s the thing.  Even if this commission doesn’t end up happening, not many people believe that Medicare spending has any chance of being defeated.  Some might say it’s just a matter of time before Medicare faces funding cuts of unprecedented levels.  The MedPAC we know today is a pretty interesting group, and they are worth paying attention to.  However, the MedPAC of 5 years from now could be a whole lot more interesting, public and powerful.

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~ by Kathryn Bailey on September 29, 2009.

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