Effects of an out-of-pocket maximum in Medicare Part D

OBJECTIVES

Three different out-of-pocket (OOP) maximums in Medicare Part D have been proposed: $2000 by the House of Representatives, $3100 by the Senate Finance Committee, and the beginning of catastrophic coverage by the Medicare Payment Advisory Commission. However, little is known about how beneficiaries would be affected.

STUDY DESIGN

We estimated multivariate linear regression models to determine which beneficiary characteristics were associated with the greatest savings under each proposed OOP maximum and simulated a potential behavioral response by beneficiaries.

METHODS

Using Part D 2017 claims data for beneficiaries in stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug (MA-PD) plans, we estimated the number of beneficiaries affected, their demographic characteristics, and their drug utilization patterns. We then simulated a potential behavioral response by beneficiaries.

RESULTS

Under the $2000 OOP proposed threshold, only 7% of PDP and 4% of MA-PD plan beneficiaries would have spending high enough to reach the OOP maximum. Annual mean (SD) savings would be $1301 ($1849) for PDP beneficiaries and $1363 ($1888) for MA-PD plan beneficiaries, concentrated among beneficiaries taking specialty drugs. As the threshold increases, fewer beneficiaries would accrue savings, but savings would increase. For the highest proposed OOP maximum, mean (SD) savings would be $2720 ($3465) and $2473 ($2805) for PDP and MA-PD plan beneficiaries, respectively. In our simulations, we estimated that the number of beneficiaries affected by an OOP maximum could increase by 2% to 11%, depending on the magnitude of response, but changes in savings would be minimal.

CONCLUSIONS

As currently drafted, proposed OOP maximums would reduce OOP spending for a small population of Part D beneficiaries, with savings concentrated among beneficiaries with the very highest costs who are taking specialty medications.

And with MIPS, we just don't know yet

It may take a little while longer to ferret out whether MIPS is having CMS's self-described effect-to "drive improvement in care processes and health outcomes, increase the use of health care information, and reduce the cost of care." Already concluding that cost reduction is unlikely, Medpac recommended scraping MIPS altogether.

Reframing Medicare Physician Payment Policy for 2019: A Look at Proposed Policy

On July 12, 2018, the Centers for Medicare and Medicaid Services (CMS) released the proposed 2019 Medicare physician fee schedule and quality payment program, combining these 2 rules for the first time. This occurred in a milieu of changing regulations that have been challenging for interventional pain management specialists. The Affordable Care Act (ACA) continuous to be amended by multiple administrative changes. This July 12th rule proposes substantial payment changes for evaluation and management (E&M) services, with documentation requirements, and blending of Level II to V CPT codes for E&M into a single payment. In addition, various changes in the quality payment program with liberalization of some metrics have been published. Recognizing that there are differing impacts based on specialty and practice type, as a whole interventional pain management specialists would likely see favorable reimbursement trends for E&M services as a result of this proposal. Moreover, in comparison with recent CMS final ruling, this proposed rule has relatively limited changes in procedural reimbursement performed in a facility or in-office setting.CMS, in the new rule, has proposed an overhaul of the E&M documentation and coding system ostensibly to reduce the amount of time physicians are required to spend inputting information into patients' records. The new proposed rule blends Level II to V codes for E&M services into a single payment of $93 for office outpatient visits for established patients and $135 for new patient visits. This will also have an effect with blended payments for services provided in hospital outpatients. CMS also has provided additional codes to increase the reimbursement when prolonged services are provided with total reimbursement coming to Level V payments. Interventional pain management-centered care has been identified as a specialty with complexity inherent to E&M associated with these services. Among the procedural payments, there exist significant discrepancies for the services performed in hospitals, ambulatory surgery centers (ASCs), and offices. A particularly egregious example is peripheral neurolytic blocks, which is reimbursed at 1,800% higher in hospital outpatient department (HOPD) settings as compared with procedures done in the office. The majority of hospital based procedures have faced relatively small cuts as compared with office based practice. The only significant change noted is for spinal cord stimulator implant leads when performed in office setting with 19.2% increase. However, epidural codes, which have been initiated with a lower payment, continue to face small reductions for physician portion.This review describes the effects of the proposed policy on interventional pain management reimbursement for E&M services, procedural services by physicians and procedures performed in office settings.

KEY WORDS

Physician payment policy, physician fee schedule, Medicare, Merit-Based Incentive Payment System, interventional pain management, regulatory tsunami, Medicare Access and CHIP Reauthorization Act of 2015.

Reducing out-of-pocket cost barriers to specialty drug use under Medicare Part D: addressing the problem of "too much too soon"

OBJECTIVES

Medicare Part D specialty drug users not qualifying for low-income subsidies (non-LIS beneficiaries) face high and variable cost sharing during the calendar year. We examined their out-of-pocket (OOP) cost patterns under the existing Part D cost-sharing policies and proposed changes to these policies.

METHODS

Using 100% Medicare claims data from 2012, we examined mean annual and monthly OOP drug costs for Medicare Part D patients who were full-year users of Part D specialty drugs for rheumatoid arthritis (RA) (n = 1063), multiple sclerosis (MS) (n = 2256), or chronic myeloid leukemia (CML) (n = 1135) under existing policy. Using the same data, we simulated costs under both proposed Medicare Payment Advisory Commission (MedPAC) policy recommendations and our own recommendations.

RESULTS

In 2012, our sample faced mean annual cumulative OOP drug costs (for all medications) of $3949 (RA), $5238 (MS), and $6322 (CML). Mean OOP costs were $977 (RA), $1613 (MS), and $2456 (CML) in January alone. A substantial proportion of total annual OOP prescription spending also occurred during the catastrophic coverage phase (RA: $1229 [31%]; MS: $2456 [47%]; CML: $3546 [56%]). Under proposed MedPAC changes, patients would have faced maximum annual OOP spending of $4700, but mean OOP costs in January and February would have been higher compared with the existing policy. Under our proposed strategy, OOP costs would have been spread evenly over 12 months (≤$392 per month). The potential incremental costs of our proposed strategy would have been $23.55 per non-LIS Part D beneficiary per year.

CONCLUSIONS

The existing Part D cost-sharing structure creates a substantial financial burden for specialty drug users, especially early in the year. Implementing both annual and monthly OOP maximum spending limits would result in lower, more consistent OOP costs, potentially increasing patients' ability to access treatments for life-threatening, chronic, and rare diseases.

Proposed Medicare Physician Payment Schedule for 2017: Impact on Interventional Pain Management Practices

The Centers for Medicare and Medicaid Services (CMS) released the proposed 2017 Medicare physician fee schedule on July 7, 2016, addressing Medicare payments for physicians providing services either in an office or facility setting, which also includes payments for office expenses and quality provisions for physicians. This proposed rule occurs in the context of numerous policy changes, most notably related to the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) and its Merit-Based Incentive Payment System (MIPS). The proposed rule affects interventional pain management specialists in reimbursement for evaluation and management services, as well as procedures performed in a facility or in-office setting.Changes in the proposed fee schedule impacting interventional pain management practices include adjustments to the meaningful use (MU) program, care management in patient-centered services, identification and review of potentially misvalued services, evaluation of moderate sedation services, Medicare telehealth services, updated geographic practice cost index, data collection on resources used in furnishing global services, reporting of modifier 25 for zero day global services, Medicare Advantage Part C provider and supplier enrollment, appropriate use criteria (AUC) for advanced imaging services, and Medicare shared savings programs. The proposed schedule has provided rates for new epidural codes with or without imaging (fluoroscopy or computed tomography [CT]) and a fee schedule for a new code covering endoscopic spinal decompression. Review of payment rates show major discrepancies in payment schedules with high payments for hospitals, 2,156% higher than in-office procedures. Some procedures which were converted from in-office settings to ambulatory surgery centers (ASCs) are being reimbursed at 1,366% higher than ASCs. The Medicare Payment Advisory Commission (MedPAC) recommendation on avoiding the discrepancies and site-of-service differentials in in-office settings, hospital outpatient settings, and ASCs has not been agreed to by CMS. Thus, even though the changes appear to be minor in physician services and in-office service payment, these changes cumulatively have been reducing payments for interventional procedures. Further, in-office reimbursement is overall significantly lower than ASCs and hospital outpatient departments (HOPDs) specifically for intraarticular injections, peripheral nerve blocks, and peripheral neurolytic injections. The significant advantage also continues for hospitals in their reimbursement for facility fee for evaluation and management services.This health policy review describes various issues related to health care expenses, health care reform, and finally its effects on physician payments for all services and also for the services provided in an office setting.

Facility Payments for Interventional Pain Management Procedures: Impact of Proposed Rules

In the face of the progressive implementation of the Affordable Care Act (ACA), a significant regulatory regime, and the Merit-Based Incentive Payment System (MIPS), the Centers for Medicare and Medicaid Services (CMS) released its proposed 2017 hospital outpatient department (HOPD) and ambulatory surgery center (ASC) payment rules on July 14, 2016, and the physician payment schedule was released July 15, 2016. U.S. health care costs continue to increase, occupying 17.5% of the gross domestic product (GDP) in 2014 and surpassing $3 trillion in overall health care expenditure. Solo and independent practices face unique challenges and many are being acquired by hospitals or larger groups. This transfer of services to hospital settings is indisputably leading to an increase in the net cost to the system. Comparison of facility payments for interventional techniques in HOPD, ASC, and in-office settings shows wide variation for multiple interventional techniques. Major discrepancies in payment schedules are related to higher payments for hospitals than comparable treatments in in-office settings and ASCs. In-office procedures, which have been converted to ASC procedures, are reimbursed at as high as 1,366% higher than ASCs and 2,156% higher than in-office settings. The Medicare Payment Advisory Commission (MedPAC) has made recommendations on avoiding the discrepancies and site-of-service differentials in in-office settings, hospital outpatient settings, and ASCs. These have not been implemented by CMS. In addition, there have been slow reductions in reimbursements over the recent years, which continue to accumulate, leading to significant reductions in paymentsIn conclusion, equalization of site-of-service differentials will simultaneously improve reimbursement patterns for interventional pain management procedures, increase access and quality of care, and finally, reduce costs for CMS, extending Medicare solvency.

KEY WORDS

Hospital outpatient departments, ambulatory surgery centers, physician in-office services, interventional pain management, interventional techniques.

Medicare payment reform and provider entry and exit in the post-acute care market

OBJECTIVE

To understand the impacts of Medicare payment reform on the entry and exit of post-acute providers.

DATA SOURCES

Medicare Provider of Services data, Cost Reports, and Census data from 1991 through 2010.

STUDY DESIGN

We examined market-level changes in entry and exit after payment reforms relative to a preexisting time trend. We also compared changes in high Medicare share markets relative to lower Medicare share markets and for freestanding relative to hospital-based facilities.

DATA EXTRACTION METHODS

We calculated market-level entry, exit, and total stock of home health agencies, skilled nursing facilities, and inpatient rehabilitation facilities from Provider of Services files between 1992 and 2010. We linked these measures with demographic information from the Census and American Community Survey, information on Certificate of Need laws, and Medicare share of facilities in each market drawn from Cost Report data.

PRINCIPAL FINDINGS

Payment reforms reducing average and marginal payments reduced entries and increased exits from the market. Entry effects were larger and more persistent than exit effects. Entry and exit rates fluctuated more for home health agencies than skilled nursing facilities. Effects on number of providers were consistent with entry and exit effects.

CONCLUSIONS

Payment reform affects market entry and exit, which in turn may affect market structure, access to care, quality and cost of care, and patient outcomes. Policy makers should consider potential impacts of payment reforms on post-acute care market structure when implementing these reforms.

Medicare's post-acute care payment: a review of the issues and policy proposals

Medicare spending on post-acute care provided by skilled nursing facility providers, home health providers, inpatient rehabilitation facility providers, and long-term care hospitals has grown rapidly in the past several years. The Medicare Payment Advisory Commission and others have noted several long-standing problems with the payment systems for post-acute care and have suggested refinements to Medicare's post-acute care payment systems that are intended to encourage the delivery of appropriate care in the right setting for a patient's condition. The Patient Protection and Affordable Care Act of 2010 contained several provisions that affect the Medicare program's post-acute care payment systems and also includes broader payment reforms, such as bundled payment models. This issue brief describes Medicare's payment systems for post-acute care providers, evidence of problems that have been identified with the payment systems, and policies that have been proposed or enacted to remedy those problems.

Medicare physician fees: the data behind the numbers

Medicare's physician fee schedule distributes nearly $60 billion annually and is a critical determinant of individual physicians' incomes, beneficiaries' access to health care services, and Medicare spending, as well as the basis for physician fees used by many private payers. The Centers for Medicare & Medicaid Services (CMS) relies on data derived from expert judgment and other sources to update the fee schedule. Although CMS's methods and data for maintaining the fee schedule have improved over the years, concerns remain about medical specialty society involvement and the lack of an effective "counterweight" to vested interests in establishing and updating the relative values in the fee schedule. This issue brief reviews the data used in the fee schedule, including the new, multispecialty practice expense survey, and the role of the American Medical Association/Specialty Society Relative Value Scale Update Committee.

Are you ready for bundled payments?

Demonstration projects reveal how alternatives to today's fee-for-service system would work.

Here, there and everywhere. With the release of MedPAC report on differences in regional Medicare spending, some providers are concerned government might overreact

A MedPAC report that details regional differences in Medicare service use has providers worried what solutions policymakers will come up with to deal with the disparities. The study "compels us to ask why the variation is occurring and what steps can be taken now to rein in the variation where it is unjustified," says Karl Ulrich, left, of the Marshfield (Wis.) Clinic.

The coming storm Medicare wage index overhaul signals changes for hospitals

Recent recommendations by the Medicare Payment Advisory Commission (MedPAC) could, if implemented, substantially alter the wage index-and redistribute billions to hospitals in the process. The Centers for Medicare & Medicaid Services (CMS) is expected to publish its recommendations soon. Whether CMS will endorse or reject MedPAC's recommendations is unclear.

What does the future hold for hospice in the present envirornment?

This has been a monumentalyear for Medicare Hospice Benefit (MHB) providers. Rapid growth in expenditures ($10 billion in 2007) and anticipated doubling of that figure in the next 10 years has drawn more attention, notably from the Centers for Medicare & Medicaid Services (CMS), the Congress, the Medicare Payment Advisory Commission (MedPAC), and Office of Inspector General (OIG). In 2007, about 40 percent of Medicare decedents used hospice compared to about 27 percent in 2000. Between 2004 and 2005, spending on hospice increased by 20 percent as compared to about a nine percent increase for overall Medicare spending. MedPAC estimates that the number of patients receiving hospice care for more than six months has increased from 14 percent in 2000, to 21 percent in 2005. How has the government responded to this growth?

Health plans target advanced imaging services: cost, quality and safety concerns prompt renewed oversight

Faced with double-digit annual increases in the use of advanced imaging services, health plans are stepping up efforts to manage imaging utilization, maintain imaging quality and ensure patient safety, according to findings from the Center for Studying Health System Change's (HSC) 2007 site visits to 12 nationally representative metropolitan communities. Plan strategies range from informing physicians about evidence-based imaging guidelines to requiring prior authorization of services to credentialing physicians and imaging equipment. Mindful of the physician backlash against managed care in the 1990s, plans are instituting requirements they perceive to be less intrusive and burdensome for physicians. Some physicians, however, view the requirements as administratively onerous and obstacles to patient care. Depending on the experience with imaging, plans may expand utilization management to other services with rapid volume increases.