Health Leaders Speak Out About MedPAC's Proposed Lower Payments for 2010

A draft recommendation to Congress released by the Medicare Payment Advisory Commission (MedPAC) Thursday has hospital officials concerned about payments for the year. The draft, which can still be revised before the full MedPAC panel votes on it in January, provides for a full "market basket" update for fiscal 2011 outpatient and inpatient hospital payments.

However, even then MedPAC staff project that overall Medicare margins will be -5.9% in fiscal 2010. The commission also reported that hospitals' Medicare margins dropped to -7.2% in 2008—down from -6% the previous year.

The data "reinforces our concerns about the Medicare buy in proposal that's currently part of the Senate health reform bill," said American Hospital Association President and CEO Rich Umbdenstock, in a statement. "For the majority of America's hospitals, Medicare payments cover less than the cost of care for hospital services to seniors, making it more difficult to make ends meet."

MedPAC staff members said, though, that hospitals that have the highest proportion of Medicare and Medicaid patients reported costs that are closer in line with what Medicare pays—suggesting they have found ways to work with Medicare rates. The hospitals with a larger share of private paying patients reported the biggest gap—suggesting that their costs are much higher and that they may not have attempted to cut costs as much as the other hospitals.