MedPAC Urges Congress to Close Pay Gap Between Hospitals, Clinics

The Medicare Payment Advisory Commission advised Congress to cut hospital reimbursement rates for procedures that can be performed more cheaply in a physician's office in order to stave off the upward trend in hospital-employed physicians and inflating Medicare and private insurance costs.



Currently, Medicare pays a higher rate for procedures performed in a higher-cost hospital setting, but MedPAC called for Congress to make the payment levels equal or closer to one another. That change could cost hospital clinics up to 5 percent of Medicare revenue, but save taxpayers and beneficiaries $1.8 billion annually.


Joanna Kim, vice president of the American Hospital Association, said the move could be devastating to hospitals that rely on this money to keep emergency rooms at standby levels.


MedPAC also said the Republican-backed proposal to convert Medicare into a fixed contribution voucher program to purchase private health insurance was "worth investigating," but its usefulness to beneficiaries and taxpayers would depend on features of a plan that have not yet been set, such as how funding would be determined and whether traditional Medicare would compete with private plans.


Readmission reduction efforts, while a step forward, disproportionately affect hospitals that care for high levels of low-income patients receiving Social Security benefits, as such patients are more likely to suffer from chronic disease and require readmissions.


MedPAC also called for further research and analysis on:


  • Bundled payments for post-acute care


  • Revised payments for hospice services


  • Dual-eligible cost reduction programs


  • Considerations for ending or extending Congressionally mandated reports on Medicare's ambulance add-on payments, geographic pay indexes for clinicians and reimbursement policies for outpatient therapy


More Articles on Medicare:

Aetna to Drop Out of California's Individual Insurance Market

Limited Medical Resident Positions Stir Controversy

Reaching Out to Improve Population Health: Q&A With Cottage Hospital CEO Dr. Maria Ryan


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