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MedPAC pushes for 1% hospital pay bump

Commission also recommends ASC payment rates to remain flat

Topics: Medicare, Reimbursement, Finance

January 11, 2013

The Medicare Payment Advisory Commission (MedPAC) this week urged the federal government to limit cuts required by the "fiscal cliff" deal in order to leave hospitals with a 1% payment increase for inpatient and outpatient care in fiscal year (FY) 2014.

  • What will the fiscal cliff deal mean for hospitals? The Advisory Board's Tom Cassels offers initial thoughts on the American Taxpayer Relief Act.

The 1% payment bump would technically be a reduction from the scheduled 1.8% increase in inpatient payments and 2% increase in outpatient payments established by a pre-existing legislative formula.

MedPAC's final recommendation to Congress was largely in line with the commission's proposal released in December, which was criticized by hospitals because it did not account for cuts made by sequestration or a potential fiscal cliff deal.

In its final proposal, MedPAC accounted for the cuts that were included in the American Taxpayer Relief Act of 2012, which requires $10.5 billion in Medicare cuts

"The context has changed since our December discussion; a proposal that would have saved money relative to the current law baseline in December now costs money relative to the new baseline as amended by the Taxpayer Relief Act," says MedPAC Chair Glenn Hackbarth, adding, "The fact that the legislative context has changed does not alter our conclusion that the base rate should increase by 1%, regardless of the Taxpayer Relief Act."

However, MedPAC notes that the final recommendation does not take into account the potential 2% reimbursement cuts to Medicare required by budget sequestration. Those cuts were delayed until March under the fiscal cliff deal.

Altogether, the final recommendation would increase Medicare hospital spending by $750 million to $2 billion over one year and by $5 billion to $10 billion over five years.

No change to ASC reimbursement rates

MedPAC this week also recommended no change to payments for ambulatory surgical centers (ASCs) in 2014. Its December proposal had called for a 0.5% pay hike for these facilities.

According to CQ HealthBeat, Hackbarth had previously expressed concern that a payment increase to hospital outpatient departments but not ASCs would widen the competitive gap between the two facilities that generally offer the same level of care.

However, commissioners determined that a 0.5% pay hike was inconsequential and evidence that Medicare beneficiaries do not to lack access to these sites suggests that a payment change was not necessary (Daly, Modern Healthcare, 1/10 [subscription required]; Norman, CQ HealthBeat, 1/10 [subscription required]; Adams, CQ HealthBeat, 1/10 [subscription required]).

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