MedPAC ponders capping Medicare patient costs

Limiting out-of-pocket spending would reduce risk exposure for beneficiaries, while higher deductibles would discourage low-value services.

By Charles Fiegl — Posted Nov. 11, 2011

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The independent congressional agency that recommends Medicare pay changes to lawmakers is debating possible reforms that would limit out-of-pocket spending while steering patients away from care they don't need.

The Medicare Payment Advisory Commission met Nov. 3 to review policy options. MedPAC makes nonbinding recommendations to Congress on Medicare payment.

The commission is aiming to reduce patients' exposure to risk in the form of unexpected and high out-of-pocket fees due to catastrophic health events, said MedPAC senior analyst Julie Lee, PhD. Reforms also would require more patient cost-sharing at the outset to discourage the use of lower-value services.

Reforming the benefit structure would help address the long-term viability of Medicare. Organized medicine groups have said the program can't use pay cuts for physician services as the only mechanism to control Medicare costs, said MedPAC Chair Glenn Hackbarth.

"We need to figure out how to sensibly share this burden across taxpayers, providers and beneficiaries," Hackbarth said.

Commissioners have reviewed alternatives to Medicare's benefit packages, but they did not vote on recommendations during the November meeting.

MedPAC will continue to study the benefit design issue, and a vote probably will take place in 2012.

Several members appeared to agree that adding a cap on out-of-pocket spending for Medicare inpatient and outpatient care would improve the program. There is no cap for out-of-pocket spending in traditional Medicare coverage. The deductible for physician care under Part B is $166, but that amount is set to drop to $140 in 2012.

A cap on patient spending could be offset by increasing the deductible. For instance, the commission discussed one option of a combined cap set at $5,000 and a combined $750 deductible for coverage under Medicare parts A and B.

Fees could be structured to encourage patients to seek more appropriate services. For instance, setting a higher deductible could prompt patients to make better decisions about their health care and avoid paying for care they don't need.

Commissioners also discussed the impact of supplemental coverage that helps patients by subsidizing some of Medicare's cost-sharing requirements. MedPAC would not recommend the elimination of supplemental plans but may consider eliminating federal subsidies so the plans are priced correctly, said Michael Chernew, PhD, a commissioner who is a professor at Harvard Medical School.

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