MedPAC Proposes Increases for Hospitals, Physicians; 0.6% Payment Increase for ASCs

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Medicare Payment Advisory Commission is proposing that Congress give hospitals that perform at higher levels in CMS' the pay-for-performance program a payment update of 2.4 percent in fiscal year 2011, based on the market basket index. Hospitals that don’t perform well on P4P would not get the payment update, a MedPAC official says.

However, the commission is also proposing another adjustment to hospitals' payments to offset increases caused by coding improvements, the official says. These reductions, of up to 2 percent in fiscal years 2011-2013, would mean an aggregate inpatient update of 0.4 percent in fiscal 2011 for high performers in the P4P program, the official says.

Don May, vice president of policy at the American Hospital Association, stated that that the AHA was "disappointed" with MedPAC's hospital payment recommendation, noting that CMS, which already has authority to apply an offset, had suggested using a "less aggressive" transition.

The exact wording of the MedPAC recommendations for hospitals is as follows:

Recommendation 1: "The Congress should increase payment rates for the acute inpatient and outpatient prospective payment systems in 2011 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program."

Recommendation 2: "To restore budget neutrality, the Congress should require the Secretary to fully offset increases in inpatient payments due to hospitals’ documentation and coding improvements. To accomplish this, the Secretary must reduce payment rates in the inpatient prospective payment system by the same percentage (not to exceed 2 percentage points) each year in 2011, 2012, and 2013. The lower rates would remain in place until overpayments are fully recovered."


MedPAC's recommendations also include a 1 percent payment update for physicians in fiscal year 2011. The commission reiterated its support for increased payments for primary care. Since overall physician payments would need to be budget-neutral, this increase would translate into a decrease in payments for specialists, the official said.

The exact wording of the MedPAC recommendation for physicians is as follows:

Recommendation: "The Congress should update physician payments for physician services in 2011 by 1.0 percent."

MedPAC also recommended a 0.6 percent payment increase for ASC services in fiscal year 2011, but only for centers that submit cost and quality data to the CMS.

MedPAC and other policymakers are questioning whether the consumer price index, the factor now used to set ASC payments, is the best choice or whether the hospital outpatient market basket might be better, the official says.

Kathy Bryant, president of the ASC Association, says the recommendation is consistent with MedPAC's past recommendations.

"The ASC Association continues to recommend that future ASC inflation updates be based on the market basket," says Kathy Bryant, president of the ASC Association. "The ASC Association is continuing to work with MedPAC to improve its recommendations to Congress."

The exact wording of the MedPAC recommendation for ASCs is as follows:

Recommendation: "The Congress should implement a 0.6 percent increase in the payment rates for ASC services in calendar year 2011 concurrent with requiring ASCs to submit cost and quality data."

The commission recommended no payment updates for inpatient rehabilitation facilities, long-term care hospitals, skilled nursing facilities and home health providers.

MedPAC's recommendations will be included in its report to Congress in March.

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