MedPAC Recommends 1% Pay Increase in 2012 for Hospitals, Physicians
On Tuesday, the Medicare Payment Advisory CommissionÂ released its annual report urging Congress to increase Medicare payments to hospitals and physicians by 1% in fiscal year 2012, MedPage Today reports (Walker, MedPage Today, 3/15).
The report reflects recommendations approved by MedPAC at a public meeting in January. The recommendations were based on assessments of:
- Beneficiaries' access to care;
- Health care providers' access to capital;
- Health care provider costs;
- Medicare payments; and
- Quality of care (Page, Becker's Hospital Review, 3/15).
Hospital Recommendations See Improvement Over Last Year
The 1% increase recommendation for hospitals is "better news" than last year's report, in which MedPAC urged a 2% annual reduction for three years to compensate for overpayments made in 2008 and 2009, MedPage Today reports (MedPage Today, 3/15).
Next year's 1% hospital payment increase would apply to both inpatient and outpatient services. The update reflects a 2.5% payment hike for inpatient services, but also a 1.5 percentage point reduction to account for mandatory documentation and coding improvements resulting from overpayments in 2008 and 2009.
MedPAC also recommended that Congress make a 2.4% pay cut to hospitals in future years to fully recuperate overpayments caused by the implementation of MS-DRGs in 2008.
According to the report, hospital outpatient services grew by 4% annually from 2005 to 2009, while inpatient admissions dropped by 1% each year. MedPAC expressed concern over incentives that allow physician practices and ambulatory surgery centers to receive higher reimbursement as hospital outpatient entities and noted that "Medicare should seek to pay similar amounts for similar services" (Becker's Hospital Review, 3/15).
Indicators Drive MedPAC's Recommendation for 1% Pay Hike
MedPAC reported that most Medicare beneficiaries have access to physicians and that despite threats to turn away Medicare patients, most physicians continue to accept beneficiaries. These indicators led MedPAC to recommend a 1% pay increase for physicians in FY 2012 (MedPage Today, 3/15).
The report also concluded that the 29.5% cut to physician payments that will go into effect on Jan. 1 if Congress does not act "would be detrimental to beneficiary access to care." MedPAC urged Congress to create a "long-term remedy" for the sustainable growth rate formula (Clark, HealthLeaders Media, 3/16).
MedPAC also reiterated comments made in last year's report urging Congress to move away from a fee-for-service payment model and consider a system that incentivizes quality care (MedPage Today, 3/15).
MedPAC Recommends Copay for Home Health Care Services
The commission also proposed no payment update for home health care services and instead urged Congress to revamp the payment system, which it said is "flawed and creates incentives for patient selection" (HealthLeaders Media, 3/16). The report suggested requiring beneficiaries to "consider the value of the benefit and share in the decision making about when to use home health services."
The report also recommended:
- A 0.5% payment increase for ambulatory surgical centers in FY 2012;
- A 1% increase for outpatient dialysis services and hospice facilities; and
- No increase for long-term care hospitals, inpatient rehabilitation facilities or skilled facilities (MedPage Today, 3/15).