MEDPAC: Hospitals Should Get 1% Payment Update in 2013

The Medicare Payment Advisory Commission's (MEDPAC) submitted its payment policy report to Congress Thursday. Its recommendations cover hospital inpatient and outpatient services, and ambulatory surgical care among other services.

Rates for hospitals and their outpatient departments should increase 1% starting in 2013, the commission recommends, but E&M (evaluation and management) visits in hospital outpatient settings should be reimbursed the same as other outpatient settings or physicians' offices, and ambulatory surgical centers should get .5% more in 2013.

MEDPAC's other recommendations and their rationales in the 443-report are as follows:

Hospital outpatient and inpatient services
From 2009 to 2010, Medicare payments per fee-for-service beneficiary for inpatient and outpatient services in acute care hospitals grew by more than 3%, resulting in 4,800 hospitals being paid $153 billion for 10 million Medicare inpatient admissions and 166 million outpatient services.

Inpatient admissions, however, declined 1% per year and outpatient services grew 4% per year between 2004 and 2010, which signals a shift from inpatient to outpatient care.

And profit margins are improving, from a negative 7.1% in 2008 to negative 4.5% in 2010, in part because hospitals slowed their cost growth due to the recession, and because they changed documentation and coding that led to higher payments.