The Medicare Payment Advisory Commission (MedPAC) released its June 2023 Report to Congress, which contains recommendations of interest to radiation oncology, including a perennial recommendation for site-neutral payments, reforms to Medicare’s wage index systems, analysis of social determinants of health, and a report on telehealth in Medicare.

Why it matters: MedPAC serves as a non-partisan legislative branch agency that provides Congress with analysis and policy advice related to the Medicare program. Additionally, site-neutral payments is an issue that has seen some traction on Capitol Hill in recent months.

Go deeper on these issues below.

Aligning fee-for-service payment rates across ambulatory settings
In its Report, MedPAC recommends aligning payment rates across ambulatory settings for serves that are safe and appropriate to provide in all settings and when doing so does not pose a risk to access, also known as site-neutral payments.

As in past reports, MedPAC’s approach to site-neutral payments identified services for which it is potentially appropriate to align payment rates based on the volume of the service in each setting. For example, if freestanding offices had the highest volume for a service, MedPAC believes it must be safe to provide that service in the freestanding setting, so its model would align the Medicare Physician Fee Schedule (MPFS) rate with the Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) payment system.

If an ambulatory surgical center (ASC) had the highest volume for a service, MedPAC recommends aligning the HOPPS rate with the ASC rate (leaving the MPFS rate unchanged). And, if hospital outpatient departments (HOPD) had the highest volume, it was determined that it is likely unsafe to provide that service outside the HOPD setting, so the payment rates for each setting would remain unchanged.

Reforming Medicare’s Wage Index Systems
Medicare uses wage indexes to adjust Medicare base payment rates for geographic differences in labor costs in its prospective payment systems (PPS). MedPAC believes that Medicare’s PPS wage indexes are inaccurate and inequitable due to data source limitations related to the use of broad labor market areas, and the number of wage index exceptions that Congress and the Centers for Medicare and Medicaid Services (CMS) have added over time to the Inpatient PPS (IPPS) wage index.

To better reflect geographic differences and be more equitable, MedPAC recommends that Medicare’s wage index systems:

• Use all-payer, occupation-level wage data with different occupation weights for the wage index of each type of provider;
• Reflect local differences in wages between and within metropolitan statistical areas and statewide rural areas;
• Cap wage index differences across adjacent local areas; and
• Have no exceptions.

These changes would either be phased in over time and/or include a stop-loss mechanism.
 
Disparities in outcomes for Medicare beneficiaries with different social risks
To better understand the steps that providers and payers have taken to address social determinants of health (SDOH), MedPAC contracted with a research firm in 2021 to review the literature and conduct stakeholder interviews. This revealed five themes:

1. Many approaches and specific interventions have been used to try to address SDOH.
2. SDOH initiatives are usually aimed at populations that include but are not exclusive to Medicare beneficiaries.
3. Participation in value-based payment arrangements may help motivate efforts to address SDOH.
4. Most health care organizations are not operating SDOH initiatives by themselves (e.g., collaboration with food banks or public housing agencies).
5. Objective evaluations of the effectiveness of SDOH efforts are limited and the findings are mixed.

Additional analysis found that both race/ethnicity and low income contributed to differential outcomes. Low income correlated with worse outcomes, and beneficiaries who were Black or Hispanic were more likely to have worse outcomes, while Asian/Pacific Islander and non-Hispanic white beneficiaries were more likely to have better outcomes.
 
MedPAC recommends two policies to focus on reducing health disparities:

1. Public reporting of quality results stratified by social risk factors; and
2. Adding a focus on reducing disparities in quality payment programs.

Mandated report: Telehealth in Medicare
Under the Consolidated Appropriations Act of 2022, MedPAC was required to evaluate the utilization of telehealth services during the COVID-19 public health emergency (PHE) and the relationship between expanded telehealth coverage and quality, access and costs. Before the PHE, CMS paid for telehealth services at the facility-based rate (lower than the nonfacility rate) regardless of where the provider was located. However, during the PHE, CMS paid the provider for a telehealth service the same rate as an in-person visit (this continues through the end of 2023). In its Report, MedPAC recommends that CMS resume paying the lower facility rate for telehealth services as soon as possible after the PHE. It also suggests that CMS collect practice data on the costs incurred providing telehealth services and adjust future payments rates, if needed.
 
Other findings

• Fee-for-service Medicare spending for telehealth services rose from $130 million in 2019 to $1.9 billion in the second quarter of 2020.
• In total, telehealth spending was $4.8 billion in 2020 and $4.1 billion in 2021.
• In 2020 and 2021, E/M services accounted for almost all of Medicare telehealth spending.
• Many beneficiaries and clinicians reported wanting to continue the option of telehealth visits after the PHE ends.
• There is a need for records review to ensure accurate billing for telehealth services; if the time providers spend with patients is typically shorter during a telehealth visit than an in-person, a smaller share of telehealth visits should be coded at higher levels than in-person visits.