Recommended Increase in Medicare Pay Lower Than Expected Cost Hike
On Thursday, the Medicare Payment Advisory Commission released its projected payment rates for fiscal year 2011, which include a 1.5% increase for inpatient hospital care, CQ HealthBeat reports (Reichard, CQ HealthBeat, 12/10).
MedPAC will vote to approve its recommendation to Congress next month (Simmons, HealthLeaders Media, 12/11). The recommendation is based upon a full "market basket" update that projects the cost of delivering inpatient care will increase by 2.5% next year.
The percentage point difference between the two figures is an attempt by MedPAC to recover overpayments to hospitals related to its recent switch to the MS-DRGs system, which was designed to improve the accuracy of payments by carefully tracking patients.
According to MedPAC officials, hospitals in FY 2009 were overpaid because of the way they coded patients under the system. MedPAC officials emphasized there was no fraud.
Under the plan, inpatient payments would be reduced by a percentage point annually until the overpayments are recovered. The plan also would make payments contingent upon hospitals' providing quality care, which currently is not a requirement.
Potential Alternative Proposal
MedPAC officials are concerned that the one percentage point drop would take too long -- up to eight years, according to MedPAC estimates -- to offset the overpayments.
As a result, MedPAC Chair Glenn Hackbarth is contacting each commissioner to discuss a possible alternative plan, in which MedPAC would decrease the payment rates by two percentage points annually for four years.
MedPAC commissioners said they are concerned that if enough is not done now, overpayments would grow so much that Congress would be hesitant to enact large cuts to address the issue in the future.
Other draft recommendations for FY 2011 include:
- A 2.5% increase in payments for hospital outpatient care;
- A 0.6% increase in payments for ambulatory surgery centers;
- A 0.9% increase in payments for dialysis facilities;
- A 1.2% increase in payments for hospice services -- which is lower than originally planned, due to a productivity adjustment; and
- No payment updates for skilled nursing facilities (Reichard, CQ HealthBeat, 12/10).
Health care providers are voicing concerns about the recommendations, which the say will exacerbate underpayments by Medicare (HealthLeaders Media, 12/11).The report did not recommend any update in the market basket for home health agencies, but commissioners said they were concerned about the possibility of overpayment and fraud in the field (CQ HealthBeat, 12/10). 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.