MedPAC declines to recommend to Congress additional pay bumps for doctors, hospitals

A top Medicare advisory board did not recommend any new payment hikes for acute care hospitals or doctors for 2023, stating that targeted relief funding has helped blunt the impact of the COVID-19 pandemic.

The Medicare Payment Advisory Commission (MedPAC), which makes recommendations to Congress and the federal government on Medicare issues, voted on the payment changes to Congress during its Thursday meeting. The panel decided against recommending any pay hikes.

The commission unanimously voted to update 2023 rates for acute care hospitals by the amounts determined under current law. The Centers for Medicare & Medicaid Services will publish its update to the current law payment rates this summer.

MedPAC estimated that the rates will increase 2% and that there would be 3.1% growth in hospital wages and benefits, but these “may be higher or lower by the time this is finalized,” said MedPAC staff member Alison Binkowski.

She added there will be another estimated 0.5% increase in inpatient rates.

MedPAC decided not to recommend any pay rates beyond current law after looking at the financial picture for hospitals and found the indicators of payment adequacy are generally positive.

“Hospitals maintained strong access to capital thanks to substantial federal support, including targeted federal relief funds to rural hospitals which raised their all-payer total margin to a near-record total high,” Binkowski said.

She added fewer hospitals closed, and facilities continued to have positive marginal Medicare profits.

It was also difficult to interpret changes in quality that traditionally would determine whether a payment boost would be needed.

“For example, mortality rates increased in 2020, but this reflects the tragic effects of the pandemic on the elderly rather than a change in the quality of care provided to Medicare beneficiaries or the adequacy of Medicare payments,” Binkowski said.

Even though commission members agreed with the recommendation for hospitals, they were concerned whether it was enough to help facilities meet drastic increases in labor expenses.

“With labor, it is more than just a salary increase these hospitals are seeing,” said commission member Brian DeBusk.

He noted that hospitals haven’t just seen an increase in rates for contract or temporary nurses, but in nursing education as well.

MedPAC also recommended no changes to the statutory payment update for dialysis facilities and shouldn't give a payment update to ambulatory surgery centers (ASCs) due to confidence in payment adequacy for the facilities.

"Despite the public health emergency, the number of ASCs increased by 2% in 2020," said MedPAC staff member Daniel Zabinski. "The growth that we saw in the number of ASCs also suggests access to capital remains adequate."

Physician fee schedule recommendation

The commission decided to take a similar estimate with the physician fee schedule, calling for any update to be tied to current law, which is estimated to have no change in spending.

Medicare payments to clinicians declined by $9 billion in 2020 but were offset thanks to congressional relief funds. Physicians also got a 4% bump to payments through 2022 compared to prior law.

The temporary rate hike is expected to go away at the start of 2023, but physician groups are likely to lobby Congress to keep the pay bump intact.

Physician groups already blasted the recommendation from MedPAC.

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, tweeted that the recommendation was out of touch, especially after new reports of inflation.

“Hard to conceive of a more misguided recommendation to Congress at a time when practices face massive staffing shortages and skyrocketing expenses,” he tweeted.