MedPAC Issues Report to Congress on Medicare and the Health-Care Delivery System

The Medicare Payment Advisory Commission (MedPAC) recently released its June 2024 Report to the Congress: Medicare and the Health-Care Delivery System. Each June, as part of its mandate from Congress, MedPAC reports on improvements to Medicare payment systems, issues affecting the Medicare program, and changes to health care delivery and the market for health-care services. This report includes a discussion of both Medicare Physician Fee Schedule (MPFS) payment rates, as well as issues surrounding provider networks and prior authorization in Medicare Advantage.

This report highlights concerns regarding increasing costs to Medicare clinicians and MPFS payment rates: “This gap between the growth in clinician input costs and updates to MPFS payment rates could, over time, create incentives for clinicians to reduce the number of Medicare beneficiaries they treat or stop participating in Medicare entirely.”

This report discusses two approaches that would update MPFS payment rates based on some measure of inflation. The first approach would update the practice expense portion of the fee schedule payment rates by the hospital market basket, adjusted for productivity. The second approach would update total fee schedule payment rates by the Medicare Economic Index (MEI) minus one percentage point.

This report also notes that provider networks and prior authorization are tools that have the potential to promote more efficient care. However, misapplication of these tools could lead to delays or denials of needed care. Accordingly, restrictive or inadequate networks and prior authorization have been identified as a major source of provider administrative burden and can become a health risk for patients if it results in needed care being delayed or denied.