MedPAC suggests modest hospital payment bump for 2012

The Medicare Payment Advisory Commission (MedPAC) is considering a draft recommendation that would bump up hospital payments in fiscal year 2012 by 2.6 percent. That full "market basket" update would be counterbalanced by a 1.6 percent reduction to reflect mandatory offsets for presumably improved coding and documentation processes, making the overall payment increase only 1 percent.

The recommendation was made at MedPAC's regular public meeting in Washington last week, and was presented by commission chair Glenn Hackbarth, who stressed that the proposal was his alone.

Among the factors cited by MedPAC for such a modest increase was a relatively high payment growth rate of more than 6 percent prior to 2008, and the fact that the financial crisis and severe recession that descended in the latter part of the year helped bring down costs. Growth in costs per discharge grew only 3 percent in 2009, the lowest rate since 2000. However, the Medicare program also overpaid hospitals in 2009 and 2010 as a result of their implementing cost efficiencies, meaning lower rate increases in the intervening years will be required to recoup those payments.

MedPAC will vote on its draft proposals in January 2011, and will submit them to Congress for approval after that.

For more:
- read the AHA News article
- read the Becker's Hospital Review article
- here's the MedPAC meeting transcript