Trustees ex­tend Medi­care’s life­line, but fear a physi­cian ex­o­dus

Modern Healthcare - - NEWS - By Vir­gil Dick­son

Medi­care Part D ex­pen­di­tures per en­rollee are es­ti­mated to in­crease by an av­er­age of 6.4% an­nu­ally over the next five years. That’s higher than the pro­jected av­er­age an­nual rate of growth for the U.S. econ­omy, which is 5.2 % for that pe­riod.

Al­though Medi­care was once again saved from manda­tory spend­ing cuts, there’s con­cern that a new re­im­burse­ment model will spur doc­tors to drop out of the pro­gram.

The Medi­care Ac­cess and CHIP Reau­tho­riza­tion Act, which re­placed the much-dreaded sus­tain­able growth rate for­mula for set­ting physi­cian pay, dra­mat­i­cally al­ters how doc­tors are paid un­der Medi­care. The an­nual physi­cian pay­ment up­date for 2017 through 2019 will be 0.5%. For 2020 through 2025, there will be no pay­ment up­date, which alarmed Medi­care’s board of trustees.

“Th­ese amounts do not vary based on un­der­ly­ing eco­nomic con­di­tions, nor are they ex­pected to keep pace with the av­er­age rate of physi­cian cost in­creases,” the trustees said in their re­port is­sued last week. “Ab­sent a change in the de­liv­ery sys­tem or level of up­date by sub­se­quent leg­is­la­tion, ac­cess to Medi­care-par­tic­i­pat­ing physi­cians may be­come a sig­nif­i­cant is­sue in the long term un­der cur­rent law.”

On a more pos­i­tive note, the trustees did find that Medi­care will re­main sol­vent un­til 2029, which is a year longer than pro­jected in last year’s re­port. Based on the new find­ings, the feared In­de­pen­dent Pay­ment Ad­vi­sory Board, des­ig­nated as part of the Af­ford­able Care Act to rein in Medi­care costs if they grew faster than a set rate, will not be ac­ti­vated.

That’s likely good news as the board, called a death panel by its op­po­nents, has never had to be formed. There hasn’t been the need, and some say, the will­ing­ness to ex­pend the po­lit­i­cal cap­i­tal. With midterm elec­tions com­ing and pos­si­ble fall­out likely if Repub­li­cans re­peal the ACA, this is one less pos­si­ble po­lit­i­cal headache to worry about. Also of note, 2029 is 12 years later than pro­jected es­ti­mates be­fore the ACA be­come law.

The new in­sol­vency date does in­cor­po­rate mod­est sav­ings from the agency’s move to value-based care, in­clud­ing ac­count­able care or­ga­ni­za­tions. How­ever, ex­act fig­ures were not bro­ken out.

“The in­no­va­tions be­ing tested un­der the ACA, such as bun­dled pay­ments or ac­count­able care or­ga­ni­za­tions, could re­duce in­cen­tives to adopt new cost-in­creas­ing tech­nolo­gies and could con­trib­ute to greater ef­forts to avoid ser­vices of lim­ited or no value within the ser­vice bun­dle,” the re­port says.

Medi­care Part D ex­pen­di­tures per en­rollee are es­ti­mated to in­crease by an av­er­age of 6.4% an­nu­ally over the next five years. That’s higher than the pro­jected av­er­age an­nual rate of growth for the U.S. econ­omy, which is 5.2 % for that pe­riod.

The re­port found that th­ese costs are trend­ing higher than pre­vi­ously pre­dicted, par­tic­u­larly for spe­cialty drugs.

In 2016, Medi­care cov­ered 56.8 mil­lion peo­ple and ex­pen­di­tures were $678.7 bil­lion, up from $647.6 bil­lion and 55.3 mil­lion ben­e­fi­cia­ries in 2015.

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