One of the main topics discussed during the December meeting of Medical Payment Advisory Commission (MedPAC) was about a proposal that would rule out certain sections of the existing formula used for calculating the payments for Medicare Advantage (MA) plans. They thought that the current formula was incapable of compensating the plans fairly.

The proposal seeks to rule out the caps on pay scales (benchmarks). In addition to that, it focuses on preventing the doubling of quality bonuses. As per the reports, the quality for bonuses designed for certain plans for certain counties are currently doubling. MedPAC sees this as a challenge that needs to be dealt with immediately.

According to MedPAC, ensuring the aforementioned would simplify the entire process calculating payments to plans. It would also ensure fairness in the overall process. Above all, the proposed changes can bring substantial programs in the Medicare programs in terms of cost.

The target of Medicare is to reduce the amount paid to MA plans in bids. When MA plans submit their bids, they are expected to include the estimated cost required to implement the plans in specific areas. There are different scales for the payments and it usually varies depending on the counties where they are implemented.

In a recent report, MedPAC observed that the current criteria used for calculating the scales of pay for the counties were outdated. It pointed out the instances where some counties received quite less than what they deserved, while other counties received more. Once the existing caps are removed, each county would be able to receive their payments as they deserve.

MedPAC said that increasing the consistency for the payment scales across all the counties was important and they would implement policies that would ensure the same. Another observation was the double quality bonus payments in some urban counties. Some counties get 10 percent quality bonus while others are able to get only 4-5 percent of quality bonus.

As per the existing system, the CMS is supposed to develop a unique risk adjustment model when a draft proposal is submitted. Often, it ends up excluding the diagnosis. At times, the current Health Risk Adjustment (HRA) works in favor or the plans.

In short, MedPAC wants to ensure that CMS no longer uses chronic conditions as a factor to determine benchmarks for Health Risk Adjustment.

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