MedPAC Again Recommends No Pay Raise for Docs Treating Medicare Patients

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WASHINGTON — Should doctors who treat Medicare patients get a pay raise for 2022? No, says the Medicare Payment Advisory Commission (MedPAC).

“Our indicators are positive” when it comes to physician payment rates in Medicare, said Jim Mathews, MedPAC’s executive director, in a briefing announcing the release of MedPAC’s annual March report to Congress. “We do see through the course of our Medicare beneficiary survey fielded in 2019 that Medicare beneficiaries have access to clinician services at least as good as — if not better than — their privately insured counterparts aged 55 to 64. They have better rates of finding a physician when they need one and better rates of not foregoing needed care relative to the commercially insured population — although, consistent with longstanding trends, we do see that Medicare beneficiaries do have more difficulty finding a primary care physician when they’re looking for one relative to finding a specialist.”

Although 2019 was the latest information available on those data points, MedPAC also fields its own beneficiary access survey each year, he continued. “This year we did field that survey in late summer/early fall 2020, and even at that point in time, Medicare beneficiaries were not experiencing substantial increases in foregone care or an increase in difficulty in finding new physicians if they were looking for one,” he said. Mathews admitted that even though “we do not have robust quality-of-care information and don’t have information on physician costs in providing care,” the indicators that are available led the commission to agree with current federal law, which mandates no payment increase in 2022 for clinicians.

In response to a question from MedPage Today, Mathews said the commission was “cognizant of the fact that clinicians, like the rest of us, do experience year-over-year inflation in the cost of living, which does involve the cost of running a practice — it’s always a consideration when we are contemplating the adequacy of Medicare payments.”

However, “we don’t have cost information to calculate a profit margin … where we can say Medicare is paying way too much relative to cost, or Medicare is not paying enough,” he continued. “We have to rely more on direct or indirect measures of adequacy of Medicare payments” such as survey data, the numbers of clinicians who take assignment from Medicare, and changes in utilization of services by Medicare beneficiaries. “And when we look at all those indicators, we see all of them indicating that Medicare payments are sufficient to ensure beneficiary access to physician services, at least this year,” Mathews said.

The lack of a pay increase, however, “is something many commissioners have been concerned about, and they have made a passing mention in public meetings,” he added. “Should any of these indicators start to change, at that point we would reconsider … but at the moment, all indicators are positive enough that the commission has not moved away from the current-law 0% update for physicians.”

This is not the first time MedPAC has recommended a 0% update for the physician sector. Commissioners made the same recommendation for 2021, and for both 2020 and for 2019 they endorsed a 0.5% increase, as recommended under the budget rules at the time.

Physicians did fare better this year than inpatient rehabilitation facilities (IRFs), for whom MedPAC recommended a 5% decrease in reimbursement. “Our analysis of IRF supply and volume of services provided suggests that capacity remains adequate to meet demand,” the commission noted in its report. “Moreover, the marginal profit, an indicator of whether IRFs with excess capacity have an incentive to treat more Medicare beneficiaries, was robust for both freestanding and hospital-based IRFs, providing a very positive indicator of patient access.” MedPAC recommended the same decrease for home health agency payments.

On the other hand, the commission recommended a 2% reimbursement increase for acute care hospitals, who continue to lose money on Medicare patients. Despite that fact, “we see very robust participation in Medicare by hospitals,” Mathews said. “We see slight declines in inpatient utilization and small increases in outpatient utilization consistent with longstanding trends.”

“When we look at financial performance over the last couple of years, we have seen increases in profit margins for hospitals participating in the Medicare program; for 2019 we are calculating a -8.7% Medicare margin, and projecting that to increase to -6.o% in 2021,” he added. “On the basis of these indicators, we are recommending a 2% increase in the rates for inpatient and outpatient services,” as well as asking that Medicare revise its quality improvement programs for hospitals. Combining those recommendations “result in net increases in hospitals’ Medicare revenues in 2022.”

On the issue of telehealth, “we think Congress and CMS did the right thing by the expansions that were implemented to address potentially tremendous access-to-care issues created by the pandemic, but now we’re starting to think about what the landscape should look like once we’re free and clear of the public health emergency,” Mathews said.

MedPAC is not making a formal recommendation in this area yet, but the commissioners agree that “the expansions that have been implemented should be allowed to continue for some period of time after the public health emergency, but definitely not permanent yet,” he said. “Once the public health emergency ends, we believe that Medicare should revert back to the lower facility rate that it paid for telehealth prior to the public health emergency; that would reduce payments for telehealth services and the program could use data collected over 1 or 2 years after the end of the public health emergency to fine-tune those payment rates.”

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    Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

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