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The Medicare Payment Advisory Commission (MedPAC) issued a report Tuesday that  advises Congress to change the benchmark policy for the growing Medicare Advantage (MA) program. It also recommended that the Centers for Medicare & Medicaid Services streamline the number of alternative payment models (APMs).

MA benchmarking

MedPAC, an independent congressional agency that issues a report every June, argued that current benchmarking policy for MA has led to a strong MA program in terms of plan participation, beneficiary enrollment and the value of extra benefits for enrollees. However, it has not saved the program money. Medicare actually spends 4% more for MA beneficiaries than for similar enrollees in traditional fee-for-service Medicare, MedPAC said. MA increasingly covers older adults at home.

Medicare should move away from a quartile system that generates geographic variation in plan payments and fails to capture savings for the Medicare program. Among the problems, “large rebates result in plans offering a disproportionate level of extra benefits,” MedPAC said. And as MA rebates increase, a smaller share of those rebates is applied for cost-sharing and premium reduction.

A better MA benchmark policy would bring benchmarks in the two lowest spending quartiles, decrease benchmarks in some of the areas with the highest spending that lead to the highest share of rebates and not disrupt the supplemental benefits aspect of the program, MedPAC said.

Alternative payment models

MedPAC also recommended that CMS streamline its APMs. It should “operate a smaller portfolio of more harmonized models, with more consistent parameters and clearer and more aligned incentives.”

The smaller portfolio would encourage providers to offer care more efficiently across the continuum, which could decrease Medicare spending. It also would benefit beneficiaries if the approach allows providers to better manage their care and results in improved health outcomes.

Many APMs are located within the Center for Medicare and Medicaid Innovation, which came into being with the enactment of the Affordable Care Act in 2010. In 2021, CMS plans to operate 12 APMs offering 25 distinct tracks for providers that offer different payment options and risk arrangements. The Home Health Value Based Purchasing Model is an APM.

One of the problems with so many models is overlapping participation among providers, which can dilute financial incentives of the models. It also can make it difficult to accurately assess the impact of a given payment model on program spending and quality.

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