In FY 2012, hospitals should be given a 1 percent increase in Medicare payments for both inpatient and outpatient services, and physicians should also get a 1 percent raise, according to a new report by the Medicare Payment Advisory Commission.
The commission started with a recommended hospital update of 2.5 percent, but it then factored in a 1.5 percentage-point reduction to make up for perceived overpayments during the phase-in of Medicare severity-DRGs in the past few years. MedPAC also recommended a further 2.4 percent adjustment for hospitals in future years to prevent further overpayments.
The commission based its recommendation on assessments of beneficiary access to care, quality of care, providers' access to capital, provider costs and Medicare payments.
MedPAC made the following findings on hospitals:
Outpatient services grew. Volume of hospital outpatient services per beneficiary grew by 4 percent per year from 2005-2009, but the same figure for inpatient admissions declined by 1 percent per year. Hospital-based outpatient physician office visits grew by 9 percent, accounting for one-quarter of all growth in outpatient volume.
Some quality measures improved. Hospitals successfully reduced in-hospital and 30-day mortality rates in five prevalent clinical conditions, and patient experience measures showed a slight improvement. But patient safety indicators and readmission rates did not significantly improve.
Medicare margins improved. Medicare payment growth outpaced cost growth. Medicare inpatient payments per discharge grew by 5.3 percent, the highest growth in more than a decade, reflecting payment updates and documentation and coding improvements. Meanwhile, costs per discharge grew by 3.0 percent, the lowest rate since 2000, due to the recession.
MS-DRGs caused overpayments. Implementation of MS-DRGs in 2008 created inpatient overpayments to hospitals. For this reason, MedPAC recommended the 1.5 percent payment adjustment in 2012 and the 2.4 percent adjustment later on.
Concerns over hospital outpatient rates. MedPAC noted that physician practices and ASCs receive higher reimbursements when they become hospital outpatient entities. To avert this incentive, "Medicare should seek to pay similar amounts for similar services," taking differences in quality and relative risks to patients into account, the commission said. Hospital outpatient services, however, should get a 1 percent increase next year to account for "growing payment rate disparities among ambulatory care settings," the report said.
Read the MedPAC fact sheet on proposed rate increases (pdf).
Read the full MedPAC report (pdf).
The commission started with a recommended hospital update of 2.5 percent, but it then factored in a 1.5 percentage-point reduction to make up for perceived overpayments during the phase-in of Medicare severity-DRGs in the past few years. MedPAC also recommended a further 2.4 percent adjustment for hospitals in future years to prevent further overpayments.
The commission based its recommendation on assessments of beneficiary access to care, quality of care, providers' access to capital, provider costs and Medicare payments.
MedPAC made the following findings on hospitals:
Outpatient services grew. Volume of hospital outpatient services per beneficiary grew by 4 percent per year from 2005-2009, but the same figure for inpatient admissions declined by 1 percent per year. Hospital-based outpatient physician office visits grew by 9 percent, accounting for one-quarter of all growth in outpatient volume.
Some quality measures improved. Hospitals successfully reduced in-hospital and 30-day mortality rates in five prevalent clinical conditions, and patient experience measures showed a slight improvement. But patient safety indicators and readmission rates did not significantly improve.
Medicare margins improved. Medicare payment growth outpaced cost growth. Medicare inpatient payments per discharge grew by 5.3 percent, the highest growth in more than a decade, reflecting payment updates and documentation and coding improvements. Meanwhile, costs per discharge grew by 3.0 percent, the lowest rate since 2000, due to the recession.
MS-DRGs caused overpayments. Implementation of MS-DRGs in 2008 created inpatient overpayments to hospitals. For this reason, MedPAC recommended the 1.5 percent payment adjustment in 2012 and the 2.4 percent adjustment later on.
Concerns over hospital outpatient rates. MedPAC noted that physician practices and ASCs receive higher reimbursements when they become hospital outpatient entities. To avert this incentive, "Medicare should seek to pay similar amounts for similar services," taking differences in quality and relative risks to patients into account, the commission said. Hospital outpatient services, however, should get a 1 percent increase next year to account for "growing payment rate disparities among ambulatory care settings," the report said.
Read the MedPAC fact sheet on proposed rate increases (pdf).
Read the full MedPAC report (pdf).