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REFORM AND REFINE PAYMENT METHODS
TO ENCOURAGE EFFICIENT SERVICE DELIVERY
Evidence:
United States. Government Accountability Office. "Medicare: High Risk Issue." 30 Nov 2018
CMS has continued to implement payment reforms in various parts of the program but some payment areas still need attention, including aspects of physician payment, end-stage renal disease such as home dialysis, Medicare Advantage, and preventive services.
CMS pays for certain services at a higher rate if the service is performed in most hospital outpatient departments than if it were performed in a physician’s office. CMS is likely paying more than necessary for many of these services, which is inconsistent with Medicare's role as an efficient purchaser of health care services. While Congress partially addressed this by effectively equalizing the payment rates for some new hospital outpatient departments, Congress has not yet directed the Secretary of Health and Human Services (HHS) to take further steps that can equalize payment rates between settings for evaluation and management office visits – and other services as appropriate – and to return the associated savings to the Medicare program.
Providers that self-refer certain services, including diagnostic imaging, prostate cancer radiation treatment, and anatomic pathology services, referred beneficiaries for these services at a much higher rate than providers who did not self-refer. Self-referral occurs when providers refer their patients to entities – such as themselves or a group practice –with which they or an immediate family member has a financial relationship. CMS needs to better identify claims from physicians who self-refer patients to receive advanced imaging, anatomic pathology, and prostate cancer treatment services; reduce payments for certain self-referred services; and, for prostate cancer radiation treatment services, disclose physicians’ financial interest to patients to avoid unnecessary increases in these self-referred services.
CMS pays plans in Medicare Advantage (MA), Medicare’s private plan alternative to traditional Medicare, a predetermined amount per enrolled beneficiary adjusted for health status. For example, CMS determines a risk score for beneficiaries and pays more to MA plans serving beneficiaries in poorer health to compensate for their expected greater use of services. The agency could realize program savings by improving the accuracy of its MA risk score adjustments, such as by using the most current data available. CMS has taken steps to collect encounter data –information on the services and items furnished to enrollees – that are more comprehensive than the beneficiary diagnosis data the agency currently uses to risk-adjust payments to MA organizations. CMS has started using encounter data in calculating risk adjustments, but has yet to fully validate the data.
CMS sets payment rates for drugs that are typically administered by a physician based on the average sales price. The payment rates do not account for coupon discounts, which are prohibited in Medicare but are generally available to privately insured patients. Congress could grant CMS authority to collect data on coupon discounts, which could inform CMS’s efforts to design and evaluate alternative payment systems that result in lower Medicare spending for drugs with coupon programs.