MedPAC Recommends 1 Percent Inpatient, Outpatient Medicare Payment Increase
March 18—Congress should increase payment rates for inpatient and outpatient prospective payment systems in 2014 by 1 percent, recommends the Medicare Payment Advisory Commission (MedPAC) in its annual Report to the Congress: Medicare Payment Policy.
The report, released Friday, analyzes payment adequacy in fee-for-service Medicare; Medicare Advantage, including special-needs plans; and Medicare Part D. Along with the recommendation for a 1 percent payment update, MedPAC also recommends the following:
- The Secretary of the U.S. Department of Health and Human Services (HHS) should eliminate the update to the payment rates for long-term care hospitals for FY14.
- Congress should direct the HHS Secretary, within three years, to permit Medicare Advantage plans to enhance benefit designs so that benefits can vary based on the medical needs of individuals with specific chronic or disabling conditions.
- Congress should replace the sustainable growth rate system with a 10-year path of statutory fee-schedule updates.
HFMA Analysis: MedPAC’s recommended 1 percent update represents a slight increase over 2013 payment levels. It incorporates ACA-mandated productivity and budget adjustments as well as a 0.8 percent reduction related to alleged overpayments, but it does not include a similar reduction for a prior period that could result in a negative payment update for 2014. HFMA has long urged the Centers for Medicare & Medicaid Services to stop arbitrary payment reductions related to implementing MS-DRGs. The gradual increase in case mix was a natural result of the shift of lower-acuity conditions and procedures to outpatient settings. Given that inadequate payment updates persist, however, providers should focus on radically reducing their cost structures.
Publication Date: Monday, March 18, 2013