Medicare physician pay should be increased yearly, with the increase based on the Medicare Economic Index (MEI), a measure of healthcare inflation, the Medicare Payment Advisory Commission (MedPAC) said in a report to Congress
"In our March 2025 report to the Congress, the commission recommended that the Congress, for 2026, replace current-law updates for PFS [physician fee schedule] services with a single update equal to MEI minus 1 percentage point," the report noted. "That recommendation applies only to one year -- 2026." For future years, "the commission recommends replacing the current-law updates to the PFS with an annual update based on a portion of the growth in the MEI, such as MEI minus 1 percentage point, based on the historical evidence suggesting that updates of full MEI have not been necessary to maintain beneficiary access to care."
"This recommendation would automatically adjust to changes in inflation, improve predictability for clinicians, beneficiaries, and policymakers, be simpler to administer, and balance beneficiary access with beneficiary and taxpayer financial burden," the authors wrote.
At a press briefing for reporters Wednesday, MedPAC executive director Paul Masi, MPP, said that their recommendation is based on several factors, including how hard it is for Medicare beneficiaries to find doctors who take Medicare. "For many years, the commission has found that [physician] access has been as good as or better than that of privately insured patients," he said. "At the same time, growth and clinicians input costs exceeded payment updates under the fee schedule by an average of about 1 percentage point per year, from 2001 to 2020, which suggests that full MEI updates have not been necessary to maintain Medicare beneficiaries' access to care."
"Looking ahead, however, clinicians input costs are expected to exceed current law upgrades by between 1.5 to 2 percentage points, which is more than the 1-percentage-point historical average," he continued.
Asked by MedPage Today to elaborate on this further, Masi said that in addition to its survey of access to physicians, "we also look at other data reporting the rates that clinicians accept private insurance relative to the rates that clinicians accept Medicare, and those also are both high and comparable. And then we also looked at information such as claims data under the physician fee schedule, where we showed Medicare beneficiary utilization of care continued to increase."
MedPage Today also asked Masi for his thoughts on the recent discussion at the American Medical Association (AMA) annual meeting about whether the AMA should issue guidance for physicians who want to opt out of taking Medicare. "We don't have any response to that specific observation, but appreciate you sharing that," he said. "I would say the commission does track opt-out rates as best we can with the data we have, and we have seen that they remain relatively low, but that's certainly something we will continue to track."
The commissioners also said that they have concerns about the adequacy of the relative value units (RVUs) used to calculate updates to the Medicare physician fee schedule. "The commission recommends that the Congress direct the [Health and Human Services] secretary to further improve the accuracy of relative values for clinician services by collecting and using timely, objective data that reflect the cost of delivering care," the report says, adding that the share of total RVUs allocated to clinician work, practice expenses, and malpractice insurance is based on cost data from 2006.
Other areas discussed in the report include:
Supplemental benefits in Medicare Advantage. These benefits, which are not covered by Medicare, include items such as reduced cost sharing for Part A and Part B services, enhanced Part D drug benefits, and other benefits such as dental, vision, or hearing services (non-Medicare services). MedPAC found that this year, Medicare paid Medicare Advantage plans approximately $86 billion to provide supplemental benefits, up from $21 billion in 2018. However, "relatively little is known about their use and associated costs," according to the report. "Better information could be used to help beneficiaries navigate the options available to them and could help policymakers identify ways of making the program work more efficiently."
Part D prescription drug plans in fee-for-service Medicare. Four trends are raising concerns among the commissioners about the long-term stability of the Part D marketplace. These include the fact that fee-for-service Part D premiums have tended to be higher than those for Part D Medicare Advantage plans, and that the fee-for-service Part D plans (PDPs) have been more likely to incur losses. "The commission plans to continue to assess the drivers of differences in average risk-standardized costs between Medicare Advantage Part D plans and PDPs, and monitor the availability of PDPs," according to the report.
Beneficiary cost-sharing for services provided by critical access hospitals (CAHs). Medicare pays CAHs -- which have 25 or fewer acute-care beds -- on a "cost-plus" basis, which is different from larger hospitals, which get paid under a prospective payment system. For most outpatient services, fee-for-service Medicare enrollees who use CAHs are charged a 20% copay, which can get expensive depending on the hospital. "The commission recommends that CAH coinsurance for outpatient services received by fee-for-service beneficiaries be set at 20% of the payment amount (rather than 20% of charges) and be subject to a cap per service equal to the inpatient deductible," the report said. "This change would protect beneficiaries from excessive amounts of coinsurance and would make CAH cost-sharing more consistent with Medicare cost-sharing for outpatient services in other hospitals."
The June report is one of two reports that MedPAC sends to Congress each year; the other one is released in March.
https://www.medpagetoday.com/publichealthpolicy/medicare/116028
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