MedPAC Calls for Increase in Medicare Payments to Providers
The Medicare Payment Advisory Commission has recommended that the federal government increase Medicare payments to most providers, saying that cutting reimbursements or keeping them at current levels "could jeopardize access to care for the elderly and disabled," the New York Times reports. The recommendation comes as President Bush, hoping to slow the rapid growth of Medicare spending, is expected to release a fiscal year 2003 budget proposal that extends provider payment reductions contained in the 1997 Balanced Budget Act. Medicare payments to doctors this year were cut by an average of 5.4% and could decrease further next year under the existing reimbursement formula, which ties compensation to changes in the gross domestic product. Calling this formula "flawed" because it does not consider growth in health care costs, the commission recommended a new reimbursement formula to increase payments to physicians by 2.5% next year. At its meeting last week, MedPAC also approved the following recommendations, which will be sent to Congress on March 1:
- Hoping to reduce reimbursement disparities between hospitals in rural and urban areas, the commission proposed that the government increase the "basic Medicare payment for inpatient services" by 2.35% for hospitals in large urban regions and by 2.9% for all other hospitals.
- The commission recommended that Congress eliminate a 15% reduction in payments to home health agencies scheduled for Oct. 1 and increase payments by 3.2% in 2003. MedPAC vice chair Robert Reischauer, who directed the Congressional Budget Office from 1989 to 1995, said, "There is no evidence we are overpaying by 15%."
- While finding that payments to most of the nation's 13,000 "free-standing nursing homes" are adequate, the panel recommended that the 1,800 hospital-based nursing homes receive a 10% increase in their basic reimbursement rates plus a 2.8% adjustment for inflation.
The 17-member bipartisan panel, created by Congress in 1997, did not estimate the cost of its proposals nor how to pay for them, but "outside experts" said they could increase Medicare spending by $15 billion a year. "We tried to achieve a proper balance of fiscal responsibility and reasonable expenditures that will guarantee access to high-quality care. We worry about taxpayers as well as Medicare beneficiaries," Glenn Hackbarth, the Republican chair of MedPAC and a former health official in the Reagan administration, said. American Medical Association chair Dr. Timothy Flaherty welcomed the recommendations and said that a failure by Congress to act upon them could "force" physicians to lay off staff or stop accepting new Medicare patients.
Congress has "often followed" MedPAC's recommendations in recent years, but enactment of new proposals is uncertain given looming budget deficits and a desire by the Bush administration to slow down Medicare growth. "Congress pays a lot of attention to the commission and its recommendations. But it's going to be difficult, in the current budgetary environment, to come up with increases in reimbursement," Rep. Jim McCrery (R-La.) said. White House officials said that Medicare's growth of 10% last year -- to $241 billion -- cannot be sustained when the baby boom generation becomes eligible for the program. The administration also "wants to hold down Medicare spending to improve the overall fiscal picture, to reduce the budget deficit and to ensure that money will be available for drug benefits," the Times reports. Trent Duffy, a spokesperson for the White House Office of Management and Budget, said that Bush's budget proposal, to be released Feb. 4, will request $190 billion over 10 years for both large-scale Medicare reform and a prescription drug benefit, the same amount he requested last August (Pear, New York Times, 1/21).
In related news, MedPAC also recommended last week that Congress set payments to Medicare+Choice plans at 100% of fee-for-service spending for regular Medicare in a particular region. Reischauer and others said that creating equality in payments on the local level was necessary in order to attract beneficiaries to Medicare+Choice, which has seen the exit of numerous plans over the past few years. "If they can't make it at 100%, let them go the way of the dinosaur," he said. But MedPAC member David Smith of the AFL-CIO disagreed with the recommendation, saying, "We do know that we could pay enough [to keep plans from leaving the program]. But we have no idea whether that's a good idea" (Health & Medicine, 1/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.