MedPAC proposes cuts
Hackbarth says 2011 cuts to ‘force’ efficiency
The Medicare Payment Advisory Commission last week proposed cuts to 2011 provider payments with an eye toward improving quality and efficiency and cracking down on fraud and abuse.
The advisory body is recommending that Congress further adjust Medicare’s hospital inpatient payments over three years to recover overpayments that have resulted from recent documentation and coding changes. MedPAC Chairman Glenn Hackbarth said the proposed adjustment is necessary and that it’s time to “force relentless pressure” on hospitals to improve their efficiency. Congress, in turn, “needs to be prepared to resist the cries” of providers who claim they’re suffering financially under Medicare’s payment rates, he said.
While pleased that MedPAC recommended a full marketbasket, or inflation, update, the American Hospital Association nevertheless is “disappointed with the commission’s coding-offset recommendation, since the CMS already has authority to apply an offset and has suggested using a less aggressive transition in its 2010 rule,” Don May, the AHA’s vice president of policy, said in an e-mail.
MedPAC called for the same recommendation as last year: to increase payment rates for inpatient and outpatient hospital services at the full rate of inflation while implementing a quality incentives program. The projected marketbasket update for hospitals is now 2.5%.
The commission also repeated its recommendation to reduce the indirect medical education adjustment by a percentage point to help finance a quality
incentives program for hospitals.
On top of this proposed update, however, MedPAC is suggesting that inpatient base payments be reduced by 2% annually over three years—from 2011 through 2013—to recoup overpayments made to hospitals in 2008 and 2009, and to prevent any future overpayments that have resulted from implementing the CMS’ Medicare severity-adjusted diagnosis-related groups, or MSDRG, coding system in fiscal 2008.
In making these small, predictable adjustments to hospital payments, the CMS would be able to achieve budget neutrality, said Julian Pettengill, a MedPAC consultant.
Last year, however, the CMS suggested it might consider a five-year transition to this adjustment. “It would be better for hospitals if the agency followed through on this suggestion,” said Steven Speil, senior vice president of health finance and policy with the Federation of American Hospitals.
The commission also recommended new conditions under which home health providers and ambulatory surgery centers get paid in its final recommendations to Congress for 2011 payments.
In a series of recommendations on home health, MedPAC proposed that Congress freeze payments for the provider group next year while requiring HHS to modify home health’s base payments to better reflect the cost of providing care. The National Association for Home Care & Hospice has maintained that these payment recommendations would result in a reduction of their members’ Medicare reimbursement.
Responding to concerns that the CMS should be more aggressive in addressing fraud and abuse in the home health industry, MedPAC also suggested that the agency review home health organizations that show unusual patterns of payment claims.
The commission also called for a 1.1% update for hospice providers, and a freeze on payments for skilled-nursing facilities, inpatient rehabilitation facilities, and long-term, acutecare hospitals. It also proposed that Congress update physician payments by 1% in 2011.
Hackbarth: Congress must “resist the cries” of providers.