Home 5 News 5 MedPAC Tells Congress Not to Hike Medicare Payments

MedPAC Tells Congress Not to Hike Medicare Payments

by | Mar 29, 2023 | News, Open Content

Current provider pay rates are “adequate,” says influential committee in its recent report to Congress.

The influential Medicare Payment Advisory Commission (MedPAC) isn’t buying into the reports about the financial struggles of hospitals, physicians, labs, and other health providers. MedPAC’s newly released annual report to Congress concludes that providers are doing just fine and don’t need a big bump in Medicare pay at this time.  

While acknowledging that 2022 “input increases for [hospitals and physicians] were higher and more volatile than they have been in recent years,” the report finds that “most indicators of hospital payment adequacy remained positive or improved” in 2021.

The MedPAC Payment Adequacy Indicators

MedPAC uses the following indicators to evaluate whether Medicare fee for service payments are adequate:

·       Whether Medicare beneficiaries have adequate access to care;
·       The quality of care beneficiaries receive;
·       Whether providers have adequate access to capital; and
·       Medicare payments and provider costs.

MedPAC also suggests that COVID-19 financial assistance that providers received from the federal government more than offset the additional costs they incurred as a result of the pandemic in 2021. Accordingly, MedPAC concludes that current Medicare payment rates are adequate and that Congress should stick to its plan of providing only modest increases in calendar year 2024. The agency’s specific payment recommendations:

  • Increase the 2023 Medicare Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) base payment rate by the market basket amount + 1 percent; and
  • Increase the Medicare base payment rate for physicians and clinicians by the market basket amount + 1.45 percent.

Not surprisingly, the American Hospital Association (AHA) and other major provider groups have criticized the new report and called on Congress to ignore its recommendations and provide increases that at the very least keep Medicare pay of hospitals and physicians in line with inflation. In a March 23 public letter, the AHA says that the MedPAC assessment totally misses the mark, noting the wide agreement among credit rating agencies and other experts that “2022 was the worst year for hospital finances since the beginning of the pandemic.” The increase MedPAC recommends “is simply not enough for the many hospitals and health systems that are in distress and struggling to keep their doors open,” the AHA adds.

The methodology of the MedPAC report has also come under fire, including the assessment of financial conditions in 2021 based on data from cost reports of hospitals whose fiscal years don’t coincide with the calendar year and whose expenses and receipt of relief funds surged at different times during the year. The MedPAC analysis also fails to account for the annual two percent reduction that will continue to apply each year after the temporary moratorium that Congress imposed to help providers through the pandemic expires.

Get the full article in our upcoming April 2023 Laboratory Industry Report, posted in advance of PDF publication.