MedPAC Votes on Final Recommendations for Hospital IPPS Update
On January 10, the Medicare Payment Advisory Commission (“MedPAC”) voted on its 2014 reimbursement recommendations for hospitals. The panel voted on recommending Congress to increase hospital payments by 1% for 2014. The MedPAC recommendations will now be sent to Congress.
The finalized recommendation for hospitals to Congress would increase inpatient and outpatient payment rates for calendar and fiscal year (“FY”) 2014 by 1%. If Congress enacts this recommendation, it would be a positive for hospital inpatient departments, given that inpatient rates could be cut by a net 0.6% for FY 2014 as part of the fiscal cliff law.
For hospital outpatient departments, it would be a negative since current law would result in a net 2% increase. The MedPAC recommendation would therefore shave 1% from that update. The panel also declined to recommend that hospital outpatient department payments be reduced to the level of physician offices, a proposal offered in the past.
During the meeting, commissioners stressed their recommendation did not take into account a possible 2% Medicare provider reduction that could come if automatic cuts occur under the sequestration provisions of the budget control law. Those are scheduled to take effect in March.
Overall, the panel’s recommendation reflects an increase in Medicare hospital spending of $750 million to $2 billion over one year and by $5 billion to $10 billion over five years. This increase in spending could make it less likely for Congress to enact the recommendation since they would cost the government more money and not less.
MedPAC is an independent Congressional agency created primarily to advise Congress on payment issues affecting Medicare. MedPAC’s recommendations are not binding, although they do influence Congress, particularly when Congress is looking to reduce the deficit.
MedPAC Revises Recommendation on Ambulatory Surgical Centers
On January 10, MedPAC voted to recommend in its March report that Congress not increase payments to ambulatory surgical centers (“ASCs”) in 2014. The recommendation differs from the proposed 0.5% payment increase discussed in December 2012.
The commission changed its draft recommendation due to the absence of actual cost data and significant increases in ASC utilization, which persuaded MedPAC that current Medicare payments are adequate. MedPAC also voted to repeat its recommendation from the March 2012 report that ASCs start providing cost data to CMS. The disclosure of information could influence future payment recommendations for ASCs.
HHS Announces 106 New ACOs for Medicare
On January 10, HHS announced the formation of 106 new Accountable Care Organizations (“ACOs”) in Medicare. The announcement now means 259 ACOs have been established since the health law was passed in 2010. The next application period for organizations that wish to participate in the Shared Savings Program beginning in January 2014 is summer 2013. The list of the 106 new ACOs can be found here.
HHS Reports Medicare Per Capita Spending Stagnant in 2012
On January 10, the Obama Administration released a report showing per capita spending in the Medicare program increased by just 0.4% in FY 2012. The increase comes after a considerably larger per capita growth of 3.6% in FY 2011 and 1.8% in FY 2010.
Supporters of the Affordable Care Act (“ACA”) will point to the per capita number as proof that tighter provider reimbursement under the ACA is leading hospitals and other providers to reduce their own costs.
Critics of the ACA will point to the FY 2012 percentage increase in overall Medicare spending. According to a Congressional Quarterly article, Obama Administration officials did not respond to requests seeking the 2012 percentage increase in overall Medicare spending. In FY 2011, per capita spending showed a 3.6% growth but a 6.2% increase in total Medicare spending.
The report acknowledged changing demographics and the increased retirements of the U.S. population will add increased strain to Medicare.
For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.
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