Medicare Advantage and physician reimbursement: A look at the MedPAC report that insurers and physicians criticized

Health plans and healthcare providers express dissatisfaction with a recent report presented to Congress by the Medicare Payment Advisory Commission (MedPAC). The American Medical Association (AMA) and the Medical Group Management Association (MGMA) criticize the recommendations regarding physician payments, while America’s Health Insurance Plans (AHIP) defend Medicare Advantage (MA).

Anders Gilberg, SVP of government affairs for the MGMA, voices concern over MedPAC’s recommendation of a 50% inflationary update for physician services in 2025, following Congress’s decision to allow a 1.69% cut to Medicare physician reimbursement for the rest of 2024. Gilberg questions the relevance of MedPAC’s annual recommendations when significant Medicare cuts to physicians in 2024 and previous years are disregarded.

AMA President Jesse Ehrenfeld acknowledges MedPAC’s acknowledgment of the lagging physician pay compared to the cost of practicing medicine but criticizes the proposed 50% tie to the Medicare Economic Index (MEI), stating that it would further widen the gap between physician payment and the cost of care.

The AMA has advocated for legislative changes requiring the MEI to more accurately reflect inflation, especially as providers face increasing costs, particularly post-COVID-19.

MedPAC’s recommendation includes updating the base payment rate and establishing safety-net add-on payments for services to low-income Medicare members. The report proposes a permanent update rather than temporary ones seen in current law, aiming for ongoing stability in payment rates.

The Biden administration’s payment cuts to physicians in 2024, followed by partial reversals in the latest spending bill, highlight the ongoing challenges in Medicare reimbursement.

AHIP’s CEO, Mike Tuffin, raises concerns about the MA estimates in the proposal and emphasizes the need to strengthen and build on the value of the MA program.

MedPAC members advocate for urgent reforms to address issues like lack of quality information for plan selection, higher payments for MA beneficiaries compared to fee-for-service counterparts, limited networks, and stricter utilization management practices in MA plans.

The commission proposes fixing coding intensity, improving encounter data, replacing the quality bonus program, and establishing fair benchmarks. AHIP counters these proposals, arguing that MA enrollment data demonstrate the program’s ability to serve individuals with greater healthcare needs effectively.

Additionally, AHIP disputes MedPAC’s assessment of MA plans’ performance compared to traditional Medicare, citing studies showing superior quality of care and clinical outcomes in MA plans.

CMS’ new risk adjustment model and changes in MA benchmark payments add complexity to the reimbursement landscape, with AHIP projecting differing impacts on payments to MA plans compared to MedPAC’s estimates.