Could Empowering MedPAC Hold Medicare Costs?

Janice Simmons, for HealthLeaders Media , June 5, 2009

Among one of the more unexpected areas of support in President Obama’s health reform letter this week to Senators Max Baucus (D-MT) and Ted Kennedy (D-MA) was for a proposal that would give the Medicare Payment Advisory Commission new power as an executive-level agency to determine Medicare reimbursement of providers.

MedPAC, established in 1997 to advise Congress on Medicare payment policies, currently has no power to implement its recommendations.

If elevated to an executive level, MedPAC’s recommendations on cost reductions would be adopted by Congress unless opposed by a joint resolution of Congress. This is a process, the president wrote, that has been used effectively by a commission charged with closing military bases, and “could be a valuable tool to help achieve health care reform in a fiscally responsible way.”

The idea actually has several origins. One source is legislation (S. 1110) introduced May 20 by Sen. Jay Rockefeller (D-WV), chair of the Senate Finance Health Care Subcommittee, who calls for MedPAC to have new authority to implement Medicare payment policy. As proposed under the bill, MedPAC would be renamed the Medicare Payment and Access Commission and given new powers such as determining payment rates for physicians and hospitals. These payment rate determinations would not be subject to judicial review.

Just a year earlier, former Sen. Tom Daschle (D-SC), who co-authored a book, Critical: What We Can Do About the American Health Care Crisis, proposed developing a Federal Health Board, which would resemble the current Federal Reserve Board for the banking industry. It would set evidence based standards for benefits and quality for federal programs—with a goal towards lowering insurance costs.

“Obviously, there’s a tradeoff here,” says Robert Berenson, MD, an Institute Fellow at the Urban Institute, in Washington, D.C. Beginning this spring, Berenson began serving his three year term as a MedPAC commissioner, but before he was installed, he co-authored a paper last year suggesting that MedPAC could take on a new role as an independent agency.

Having Congress give up authority to make decisions over how Medicare could spend money “seems fairly counter to the ways we have organized our form of government,” Berenson said. “But at the same time, there are just plenty of examples of an inability of Congress to actually bite the bullet and do what needs to happen.”

Berenson, who provided advice to Rockefeller when drafting his bill, notes that Congress is influenced by many different points view—by hospital and physician lobbies, other healthcare groups, and manufacturers of devices, drugs, imaging equipment, durable medical equipment and other medical supplies. These groups are located nationwide—essentially creating lobbying groups in every congressional district.

With many of these issues, although you have legitimate points of view, “you don’t get a balanced view,” Berenson said. “You get a concerted effort by affected stakeholders presenting one point of view to Congress—and nobody essentially on the other side.”

A revamped MedPAC could “provide the countervailing research and then evidence to what Congress doesn’t get directly from lobbyists who are arguing legitimate points of view,” he said.

With a new executive-level MedPAC, Berenson suggested that full-time officials should staff it—as opposed to part-time commissioners now. Although they might have been formerly active hospital administrators or practicing physicians, they would no longer have any conflicting interests: in other words, they would be there “fully representing the public’s interest.”

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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