The Medicare Payment Advisory Commission (MedPAC) issued its June report calling for physician payment reform. MedPAC is an independent congressional agency that advises Congress on Medicare payment policy. The report includes two approaches for updating the Medicare Physician Fee Schedule (MPFS) to reimburse for physician services more appropriately. One approach involves updating the practice expense (PE) portion of fee schedule payment rates which would address differences in payment between the MPFS and hospital outpatient prospective payment system. This would result in larger updates for services for which PE represents a larger share of total payment, such as radiation oncology. Another approach would update MPFS payments by the Medicare Economic Index (MEI) minus a one percentage point productivity adjustment. This would apply to both the work and PE components of the fee schedule, effectively updating payments for all specialties by the same amount each year. The Commission prefers the second approach because it would be easier to implement, and it would eliminate the need for policy makers to revisit the MPFS every year in order to provide separate increases to the work portion of the fee schedule.

The report also assesses Medicare Advantage use of prior authorization (PA) to manage utilization. According to the Commission’s assessment, in 2023 nearly all Medicare Advantage (MA) plan enrollees were in plans that had some form of prior authorization requirement. In 2021, MA plans made 37.5 million PA determinations, or about 1.5 determinations per enrollee. Of those, 95% of PA requests had favorable decisions. Negative determination rates ranged between 3% and 12% across plans. That same year, providers or beneficiaries requested that MA plans redetermine 11% of negative PA decisions and 80% were overturned. MedPAC will continue to monitor use of PA by MA plans, particularly as the Centers for Medicare and Medicaid Services (CMS) reforms are implemented.