MedPAC Proposal Calls for 1% Increase in 2012 Hospital Payment Rates
On Thursday, the Medicare Payment Advisory Commission proposed increasing hospital inpatient and outpatient payment rates by 1% for fiscal year 2012, CQ HealthBeat reports (Adams, CQ HealthBeat, 12/2).
MedPAC's draft recommendation for FY 2012 inpatient payments calls for a 2.6% "market basket" update -- which adjusts hospital payments for inflation -- and a 1.6 percentage point reduction to account for a mandatory documentation and coding offset resulting from overpayments in 2008 and 2009, for a net increase of about 1%.
Meanwhile, MedPAC also proposed increasing outpatient and physician payment rates by 1% and changing hospitals' productivity update from -1.4% to zero (AHA News, 12/2).
Commission staff estimated that hospitals' 2009 margins were negative, suggesting that Medicare payments were less than treatment costs, CQ HealthBeat reports. Specifically, MedPAC found that hospitals lost 2.4% on the average Medicare inpatient visit and 10.8% on the average Medicare outpatient visit in 2009.
However, MedPAC Chair Glenn Hackbarth said the commission should not recommend increasing payment rates solely to improve hospital margins, arguing that hospitals "become more efficient under financial stress."
He added that private insurers' payments to hospitals have been "pretty generous for the past 10 years," allowing hospitals to compensate for lower Medicare payments (CQ HealthBeat, 12/2).
AHA Weighs In
Meanwhile, American Hospital Association officials expressed concern about the proposal's impact on hospitals, AHA News reports.
According to AHA's Vice President for Policy Don May, the organization continues to believe inpatient payment coding adjustments are too high; however, members are "pleased" that MedPAC did not suggest applying both coding offsets and productivity cuts.
Commission members could adjust the draft language before finalizing their recommendations in January (AHA News, 12/2).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.