Premier Calls for Deeper MedPAC Analysis of Medicare Advantage Growth Impact on Hospital Finances

Premier submitted comments to the Medicare Payment Advisory Commission (MedPAC) regarding its initial analysis of Medicare Advantage (MA) growth on hospital finances that was shared at MedPAC's September public meeting. MedPAC's analysis found no statistically significant effect of growing MA enrollment on rural hospitals' revenue or costs. Premier supports continued research into this important issue and provided recommendations to enhance the analysis, aiming to better understand MA's effects on hospitals, non-acute providers and patients.

Specifically, Premier urged MedPAC to:

• Clarify statistical findings on hospital profits: MedPAC should note that the lack of statistical significance in the relationship between MA growth and net profit for hospitals paid under Medicare's Inpatient Prospective Payment System (IPPS) is the result of statistical analysis of "profit" as a variable, rather than the mathematical consequence of reductions to both revenues and operating expenses.
• Address regional variation: MedPAC should examine regional variation in the impacts of MA growth on providers, segmenting data beyond whether a hospital is paid under IPPS or under the critical access hospital (CAH) payment methodology.
• Expand analysis across care continuum: Future studies should go beyond impact on hospitals to include the finances of providers across the continuum of care.
• Differentiate MA plan types: MedPAC should separately consider impacts of MA plans that are owned and operated by large, national health insurance companies versus smaller, regional plans. Future analysis should also examine the impacts of the growth of MA plans that include dually-eligible beneficiaries compared to Medicare-only MA plans.
• Examine MA penetration levels: Stratifying results by levels of MA penetration in counties can reveal impacts of MA growth on provider finances based on whether there is a low, moderate or high level of MA penetration in a given market.
• Investigate uncompensated care effects: Additional research should explore how MA growth influences uncompensated care, as suggested during MedPAC's public meeting.