I would like to welcome back the Medicare Payment Advisory Committee. Neither MedPAC nor its witness here today, Executive Director, Mark Miller, is a stranger to the Committee. MedPAC is a key, non-partisan advisor with a lot of analytical firepower. There is bi-partisan interest in its work.
MedPAC issues two reports annually to the Congress. Its March report focuses on the adequacy of payments made to the various Medicare providers. The Committee pays close attention to those important findings and has had MedPAC testify on them in past years. The June MedPAC report focuses on how to improve the Medicare program.
Improving Medicare. That is the focus of our hearing today. We are at a critical juncture. The program faces serious financial challenges.
The Part A Trust Fund, which has paid out more than it takes in over the past several years, is slated to go bankrupt in just over a decade.
The funding needed for the Part B Trust Fund will be such an increasing drain on the Treasury that it is sure to crowd out other priorities. According to independent researchers, this important program pays out on average three times the benefits it collects from workers over their lifetime.
We are in a state of flux in how we pay our health care providers in Medicare. The popular Medicare Advantage program faces severe cuts after several years of the White House delaying the damaging Affordable Care Act cuts. Providers increasingly have their payment tied to their performance, whether in traditional fee-for-service or some alternative payment model.
The MedPAC June 2014 report addresses a number of policy issues that are key to improving Medicare’s viability and future direction.
The report reiterates MedPAC’s 2012 recommendation to improve the design of the confusing and outdated Medicare traditional fee-for-service benefit for seniors. It also discusses policy options that could help to ensure that the new benefit design works for low-income seniors.
MedPAC has outlined a design that brings clarity through a single deductible and uniform cost sharing, and peace of mind by capping the amount that seniors have to pay out-of-pocket. The design would also reduce the need to buy a supplemental policy.
Benefit redesign is not a new issue. The Bowles-Simpson Commission appointed by President Obama, and the Bipartisan Policy Center have also recommended it. The Committee has called attention to it, even devoting a hearing exclusively to the topic in 2013.
At that hearing I asked witnesses to conduct what I view as the more informative analysis: beneficiary impact over multiple years. The fact that a senior may pay a little more in any given year is not nearly so important as avoiding the years in which a senior may face frighteningly high costs.
Any beneficiary who has high costs, such as those that come with a stay in a hospital, would see a significant reduction in out-of-pocket costs. Since we know the majority of seniors will have a hospital stay over the course of their lifetime – some, many trips to the hospital – this protects seniors from costs spike in a year when they are particularly sick.
With a mom who relies on the confusing Medicare system, I’m sold. If it were up to me, this common-sense change would already be done. Hearing MedPAC’s views on how an improved benefit design can work for low-income seniors furthers the discussion.
I am confident that this reform can be done in way that has net benefit for beneficiaries even as it reduces future expenditures. Listening to those who have concerns, we must continue to work to make it happen.
The report also highlights the need to be able to compare traditional fee-for-service, Medicare Advantage, and Accountable Care Organizations. We owe it to our seniors to provide an apples-to-apples comparison of quality and cost of these options in their area. This effort can also provide vital information to set the stage for more sweeping reforms that further empower seniors and are more responsive to seniors’ health care needs.
The report also examines how payments to Inpatient Rehabilitation Facilities and Skilled Nursing Facilities differ for the treatment of similar patients. This is a continuation of a robust “site neutral” payment policy discussion that has happened over the last few years.
The House passed a site neutral policy back in 2011. In fact, a provision establishing parity between inpatient hospital and long-term care hospital payments was signed into law in late 2013.
This is a topic of great interest to members of this committee and has significant impact not only on health care providers but seniors and taxpayers. MedPAC’s work has been instrumental. We appreciate its continued focus.
The report looks at whether the method of accounting for expected patient costs, or risk adjustment, can be improved. This is important because we need to make sure payments to Medicare Advantage plans and providers are as accurate as possible.
There is a lot of interest in the topic of medication adherence, which means taking medications exactly as prescribed by the doctor to result in better patient health and outcomes. The report examines the extent to which better adherence by seniors reduces overall Medicare spending.
Finally, the report discusses possible payment policy changes to bolster access to primary care.
But before we hear from Mr. Miller, I want to say that this MedPAC report is not a book that will just sit on a shelf.
For many of the issues, it represents an on-going dialogue. This hearing is a valuable part of that conversation.
I look forward to working with the members of the Committee and MedPAC to enact policies that make the Medicare program work better for beneficiaries, providers, and taxpayers.