MedPAC Meeting

Aging Population Could Trigger Higher Medicare Spending

September 15, 2015 02:50 pm Michael Laff Washington, D.C. –

The health care needs of a rapidly aging U.S. population may reverse the current trend of slow growth in overall health spending, members of the Medicare Payment Advisory Commission (MedPAC) said during a recent meeting.

[Doctor holdling chalkboard with the word Medicare]

MedPAC reviewed projections for long-term Medicare costs during the first meeting of its 2015-16 term( last week. Total health care spending rose from 7 percent of gross domestic product (GDP) in 1973 to 17 percent in 2009 and has since leveled off. However, in the near future, the annual growth rate for total health care spending is expected to rise again.

That growth will include total Medicare spending, which is projected to rise from the current level of $540 billion to $1 trillion by 2024. Since 2005, there have been several areas where the rate of spending per Medicare beneficiary has grown faster than GDP, including skilled nursing facilities, hospice, outpatient hospital and lab services, and lab work in physician or independent offices.

As an advisory body to Congress, one of MedPAC's primary responsibilities is to identify ways to reduce costs.

"As long as we rely on the fee-for-service system, it's difficult to move the needle (on cost)," said commission member Kathy Buto, M.P.A. "We need to continue to look at the payment system."

Story highlights
  • During a recent meeting, the Medicare Payment Advisory Commission (MedPAC) reviewed data that project the Medicare population will rise from 20 million in 1970 to 80 million in 2030.
  • Francis Crosson, M.D., MedPAC's new chairman, advocated adjusting physician payments in favor of primary care.
  • The commission also discussed the effects of public records about payments from drug and device manufacturers.

Still, commission members have long supported higher payments for primary care. Francis Crosson, M.D., MedPAC's new chairman, said the physician payment system has to be adjusted in favor of primary care because the current disparity is discouraging medical students from entering the specialty.

The commission supports new payment models such as accountable care organizations (ACOs) and comprehensive care models, but details are still in question.

"Do we have enough incentives and the right incentives in ACOs?" asked commission member Warner Thomas, M.B.A., of Ochsner Health System in New Orleans.

Commissioners discussed data that suggest although new payment methods may be helping to reduce Medicare spending, there is no way to entirely counter the cost of treating an aging population. With 10,000 new beneficiaries enrolling each day, the Medicare population will rise from 20 million in 1970 to 80 million in 2030, when the last of the baby boom generation become eligible for Medicare.

Overall health prospects for the population are mixed because smoking rates are lower but rates of obesity and diabetes are on the rise. The next generation is projected to have more -- albeit better managed -- chronic conditions.

Open Payments Data

Commission members also discussed ways to ensure that payments and other transfers of value to physicians by drug and device companies do not have a negative impact on medical decisions. MedPAC reviewed an analysis of CMS data to get more detail about which specialties were receiving the highest such payments and what the payments were made for.

Among specialties receiving payments from drug and device manufacturers, family physicians ranked fourth overall at $89 million. But that money was spread out over 54,000 family physicians, making the average total payment per physician only about $1,600, which placed the specialty ninth by that measure. Orthopedic surgeons ranked first, with an average payment per physician of $20,040.

A high percentage of payments went to a small percentage of physicians, with 5 percent of physicians receiving 86 percent of the payments. Payments were made primarily for promotional speeches, licensing, consulting, food, travel and education.

Commissioners said the presence of sales reps and regular payments from drug companies can influence prescribing.

Commissioner Rita Redberg, M.D., M.Sc., said a patient should be aware if a physician has a relationship with the manufacturer of medicine that is being prescribed. She said her facility, the University of California at San Francisco, bans acceptance of sample drugs. The samples provided by pharmaceutical companies are always for newer, expensive drugs, she noted.

"If I get a payment, that could influence my decision," she said.

Thomas noted that hospitals and health systems use the CMS Open Payments website to find out what types of payments their affiliated physicians receive because many institutions do not have their own way to track such payments.

Although they praised the intent of improving transparency in medicine, commission members struggled to discern how making information about such payments public might drive policies.

"At our facility, there are no samples, no reps and no payments allowed," said commission member Scott Armstrong, M.B.A. of the Group Health Cooperative in Seattle. "That's one extreme."

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