Skip to main content

MedPAC Calls for Pay Raise for Doctors, Hospitals

 |  By cclark@healthleadersmedia.com  
   March 16, 2011

Physicians and other health professionals should receive a 1% pay boost for services provided to Medicare beneficiaries in 2012, the Medicare Payment Advisory Commission said in its latest annual list of "update" reimbursement recommendations.

"While our analysis finds that access to physician and other health professional services is good nationally, a small share of the Medicare population continues to report problems finding a new primary care physician – an essential component to a well-functioning delivery system," the commission said in its executive summary.

"In addition, a recent study found that in 2007, hourly compensation rates for some specialties were more than double the rate for primary care," and the commission has recommended enhancements to primary care practitioners, which was adopted by Congress.

Regarding course of action on the pending Sustainable Growth Rate formula, which if not repealed would cut physician pay by 29.5% starting Jan. 1, the commission said "fee cuts of that magnitude would be detrimental to beneficiary access to care." Legislative overrides prohibited those cuts from taking effect, but "are merely temporarily, leading to mounting frustration among physicians, other health professional and their patients and to a desire for a long-term remedy."

Asked for comment, the American Medical Association president Cecil B. Wilson, MD, said his group "concurs with MedPAC's conclusion that the nearly 30 percent cut built into Medicare's physician payment system for 2012 would jeopardize access to physician services for many patients and should be replaced with a positive update to help offset increases in practice costs.  

"The current Medicare physician payment formula is broken, and the AMA will work with MedPAC and policymakers on both sides of the aisle to replace it with a system that better reflects the costs and practice of 21st century medical care and provides stability for physicians and their Medicare patients."

Among other MedPAC recommendations for the Centers for Medicare and Medicaid Services:

  • Hospitals should receive a 1% payment update for inpatient and outpatient services, and Congress should require the Secretary of Health and Human Services to adjust rates to fully recover all overpayments due to documentation and coding improvement.

  • Ambulatory surgical centers should receive a .5% pay increase.

  • Outpatient dialysis centers should receive a 1% pay bump.

  •  For skilled nursing facilities, Congress should eliminate the payment update, in part because it found that access to SNF services remains stable for Medicare beneficiaries, and available bed days increased 4% between 2008 and 2009. Also, MedPAC said it "examined relatively efficient SNFs and found that it is possible to have costs well below average, above-average quality and more than adequate Medicare margins."

It also recommends that CMS improve quality measurement for SNFs by adding risk-adjusted rates of potentially avoidable re-hospitalizations and community discharge and report more accurate diagnostic and service-use information. Additionally,

  • Home health services should be reviewed with more quality measures that focus on specific conditions to assess home health quality. Also, HHS and the Office of Inspector General should review home health utilization in counties that have "aberrant home health utilization." MedPAC said, "fraud has become a significant concern in the home health benefit."

The commission says the payment system for home health agencies is "flawed and creates incentives for patient selection." Also, "the current case-mix system may, in effect, overvalue therapy services and undervalue non-therapy services," flaws HHS should address.

Beneficiaries, the recommendations say, should be required to share in the cost of home health care, "which would make the beneficiary more apt to consider the value of the benefit and share in decision-making about when to use home health services," that "should be applied to home health episodes not preceded by hospitalization or post-acute care."

The 2012 market basket pay update for home health care should be eliminated for 2012 because the number of facilities has increased "to an all-time high and Medicare's payments have exceeded their costs by 18% – the 10th consecutive year they have been in this range."

Other MedPAC recommendations are:

  • Inpatient rehabilitation facilities would not get a pay update because they "will be able to absorb cost increases and continue to provide care to clinically appropriate Medicare cases." Medicare beneficiaries now have sufficient access to IRF facilities.

  • Long term care facilities would not receive an update; their numbers have increased 6.6% from 2008 to 2009 despite a limited moratorium on new facilities and new beds in existing ones extending to Dec. 28, 2012, and access is not a problem.

  • Hospice facilities would receive a 1% payment update, however the OIG should "investigate the prevalence of financial relationships between hospices and long-term care facilities, differences in patterns of nursing home referrals to hospice, enrollment practices at hospices with aberrant utilization patterns and hospice marketing and admissions practices and their relation to length of stay."

Under the Patient Protection and Affordable Care Act, a pay-for-reporting system for long-term care facilities must be in place by 2014. The commission recommends that quality measures should include process, safety and outcome measures and should be comparable to those used in other post-acute care settings. "The next step should be pay-for-performance."

In its executive summary, the commission says that these increases or limits "will not solve the fundamental problem with current Medicare fee-for-service payment systems – that providers are paid more when they deliver more services without regard to the quality or value of those additional services." It says payment reforms, such as imposing penalties for excess readmission rates and linking a percentage of payment to quality outcomes, such as those called for in healthcare reform legislation, "need to be implemented."

And, the commission says, "delivery system reforms, such as medical homes, bundling, and accountable care organizations, need to be tested and successful models adopted on a broad scale."

Tagged Under:


Get the latest on healthcare leadership in your inbox.