The Medicare Payment Advisory Commission has released its annual report to Congress, weighing in on a slew of topics related to the program from physician reimbursement to COVID's effects to private coverage.
The commission found that coding differences in Medicare Advantage (MA) increased payments to plans by $17 billion in 2021 alone. The group estimates that higher coding intensity in MA has driven $80 billion in overpayments through 2021 and will drive an estimated $44 billion more in the next two years.
MedPAC estimated that the higher coding intensity would drive $20.5 billion 2022 payments and $23.1 billion in payments for 2023.
"Consistent with prior years, nearly all MA contracts had coding intensity greater than [fee-for-service], and the share of MA contracts that are overpaid after accounting for the coding adjustment continues to increase," the commission's analysts wrote.
Medicare Advantage plans are able to deploy several tactics that can increase coding intensity, according to the report. For example, patient assessments and pay-for-coding programs send physicians an assessment form that includes diagnostic codes that the plan identifies.
The insurer then prompts the physician to confirm those codes, and they're paid for submitting the form. Some plans offer a bonus payment to physicians who submit all of the codes identified on the form, MedPAC said.
Here's a look at some of the other key takeaways from the MedPAC report:
Additional support for safety-net providers
The commission said that its analyses determined clinicians who provide care to patients with low incomes are in need of additional financial support. Safety-net providers face financial risks due to their patient pool, as it's less profitable, but are critical to ensuring low-income patients can access the care they need.
MedPAC recommended that Medicare make a targeted add-on payment to these safety-net providers. They recommend a 15% payment to primary care clinicians and 5% for other providers under the physician fee schedule.
In addition, the commission recommended that current payments to safety-net hospitals be redistributed through its Medicare Safety-Net Index, which would boost payouts to most safety-net facilities.
MedPAC echoes slight physician payment increase
The commission said that "current payments to clinicians appear adequate," even as recent inflation could make costs harder for practices to absorb. MedPAC said the feds should increase payments by 50% of the projected increase in the Medicare Economic Index, which is used to calculate input costs for clinicians.
This would amount to a payment increase of about 1.45%, according to the report.
The group made a similar recommendation earlier this year.
Growth of drug prices in Part D
Across the board, drug prices grew in 2021 at rates approaching pre-pandemic levels, according to the report, so that Part D is feeling the effects should be no surprise.
In 2021, about 464,000 Part D beneficiaries filled a prescription that hit the out-of-pocket maximum on its own, according to the report. By comparison, just 33,000 did so in 2010.
Part D plans will likely need to lean on biosimilars to drive down costs, as generic drugs' share of prescriptions plateaued in 2017 and has not increased significantly from about 90% since, according to the report. Therefore, driving adoption of biosimilars will be a critical avenue to address drug spending.