Medicare Advisory Board Recommends Congress Raise Medicare Payment Rates to Hospitals, Doctors

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The Medicare Payment Advisory Commission (MedPAC) voted unanimously on Jan. 12 to recommend increased Medicare payment rates for hospitals and physicians next year while simultaneously slashing fees to skilled nursing facilities amid labor shortages and increases costs.

MedPAC, a nonpartisan independent legislative branch agency that makes payment and policy recommendations to Congress on Medicare issues, approved a string of recommendations during its virtual meeting on Thursday, Axios reported.

Specifically, the panel recommended Congress allow hospitals to get a 1 percent increase over current Medicare rates, and that doctors get a reimbursement increase of 50 percent of the Medicare Economic Index, citing the impact of inflation on physician operating costs. That would amount to a 1.25 percent boost to payments next year.

The panel also wants to begin a process that would change the redistribution of payments to disproportionate share hospitals and uncompensated care payments through a Medicare safety-net index, which helps reduce out-of-pocket expenses for people who face frequent medical fees.

They also called for adding $2 billion in funding to be distributed to facilities via a Medicare safety-net index in 2024.

“There is a direct incentive to care for patients who are ... low-income Medicare beneficiaries,” said Amol Navathe, vice chairman of MedPAC, during the commission’s meeting on Thursday, while noting that the current system does not operate in such a manner. “We should want hospitals and physicians to have the marginal incentive to say that ‘If I care for this patient I will be financially better off than I would if I didn’t.’”

Additionally, the panel called for doctors to receive add-on payments for services provided to low-income Medicare beneficiaries, according to Fierce Healthcare, which includes 15 percent for primary care clinicians and 5 percent for non-primary care clinicians going forward.

Inflation Putting ‘Unprecedented Pressure on America’s Hospitals’

The American Hospital Association (AHA) had anticipated a higher-than-1 percent increase over current Medicare rates, noting in a Jan. 3 letter to MedPAC leadership that “the current inflationary economy and ongoing workforce challenges have put unprecedented pressure on America’s hospitals and health systems.”

Those pressures need to be taken into consideration, according to the AHA, to “ensure that Medicare payments for hospital services more accurately reflect the cost of providing care.”

The AHA had also urged the commission to recommend a pay increase of 2.8 percent for inpatient and outpatient hospitals as well as a 2.7 percent rise for long-term care facilities and higher physician reimbursements, citing inflation, according to Fierce Healthcare.

Elsewhere on Thursday, the panel also recommended that the Medicare base payment rate for home health care be reduced by 7 percent in 2024, which is in line with previous recommendations, according to reports. 

“For beneficiary and provider implications, we expect that access to care should remain adequate and it should not affect the willingness of providers to serve beneficiaries,” Evan Christman, a senior analyst for MedPAC, said Thursday. “But it may increase cost pressure for some providers.”

Finally, the panel recommended a 3 percent Medicare payment cut for skilled nursing providers and inpatient rehabilitation facilities in 2024 and to reduce the hospice aggregate cap by 20 percent.

The latest recommendations, which CMS makes every year, come as some House Republicans are reportedly looking to cut Medicare costs as part of efforts to decrease the national debt, although nothing has yet been decided regarding potential cuts.

House Oversight Committee Chairman James Comer (R-Ky.) said on Sunday that Republicans’ spending proposals will include cuts but that they will be made across “every area of state government except Social Security and Medicare.”