September 11, 2019

MedPAC Discusses Unsustainable Financial Pressures on Medicare

Citing “sobering” spending projections, the Medicare Payment Advisory Commission (MedPAC) presented one set of data at its September 5-6, 2019 meeting that predicts future insolvency for the Medicare Trust Fund and another data set that sheds light on the size of a predicted “spillover” effect that high Medicare Advantage (MA) participation may have on fee-for-service costs and coding.

Speaking to the commission at the first meeting of its 2019–2020 cycle, MedPAC staff presented data on the current state of Medicare financing and estimates of future Medicare spending that suggested the trust fund would run out of money in 2026.

Similarly, MedPAC staff predicted that Medicare spending will more than double over the next decade. Commissioners were informed that as the number of Medicare beneficiaries increases, the number of contributing workers per beneficiary is declining.

Commissioners agreed that Medicare payment policy is unsustainable in its current state and that innovation is necessary.

MedPAC staff also presented research on the effects of MA “spillover” on Medicare FFS spending and coding.

Based on an analysis of Medicare data, the staff hypothesized that the MA environment may encourage physicians to practice more conservatively than in traditional Medicare settings. These effects may “spill over” to physician practice patterns for Medicare FFS patients, while Hierarchical Condition Coding Categories (HCC) coding spillover may create an incentive to code more completely.

The staff presentations led to an extensive discussion about the research’s methods and limitations. The findings revealed a slightly negative correlation between the level of MA market penetration and the FFS beneficiaries’ HCC-adjusted service use.

The two-day session resulted in no recommendations from the commissioners. They will meet again in October.