- The Medicare Payment Advisory Commission recommends increasing payments for hospitals, long-term care facilities and dialysis services while decreasing payments for home health and inpatient rehabilitation in 2021. The group also reiterates a suggestion to require ambulatory surgical center to report cost data, according to its annual March report to Congress.
- Medicare Advantage enrollment grew 10% from November 2018 to November 2019, with 34% of Medicare beneficiaries now in MA plans. That number is only projected to increase, the report published Friday showed.
- In a review of hospital consolidation requested by Congress, MedPAC research showed the decadeslong trend toward consolidation has generally led to higher commercial prices. It also found that greater market power leads to high non-Medicare profit margins and those margins lead to higher costs per discharge, but found the direct association between market power and costs was statistically insignificant.
The suggested hospital payment increase would be accomplished by an across the board adjustment of 2%, which is less than the 2.8% scheduled under the law. The difference would be funneled into quality rewards. The net effect would raise aggregates payments by an average of 3.3%.
The recommendation is a rare request from MedPAC to increase Medicare spending, but Executive Director Jim Matthews said in a call with reporters the commission viewed it as warranted based on reviewing margins of a subset of the most efficient hospitals. Those facilities had been bucking the trend with slightly positive margins until last year.
The change prompted the commission to consider whether a higher payment was warranted, but it favored a targeted approach. "The problem of doing an across the board higher update is, one, it costs a lot of money and, two, some of that money is going to hospitals that already have a positive margin," Matthews said.
Hospital access to capital remains strong due to years of relatively high all-payer profit margins, which were at 6.8% in 2018. "This access is reflected in significant hospital construction and strong bond offerings at relatively low interest rates," according to the report.
The commission also looked at the effects of the 340B drug discount program on health system acquisition of physician practices. It found there could be a small influence, but the effect was overwhelmed by more general trends in the prices for 340B drugs. "So we felt that even in those instances where we could observe a small statistically significant effect, it was probably not a major driver in healthcare consolidation," Matthews said.
The closer look at the MA program found that as while enrollment has surged, the market has become more concentrated. In 2007, the top four organizations had 45% of enrollment and in 2019 that number grew to 62%.The report notes, however, that the vast majority of beneficiaries lived in a country where at least three companies offered plans last year, meaning plan options haven't necessarily been curtailed.