Policy

The Medicare Payment Advisory Commission (MedPAC) met last week to discuss its draft recommendations for updating physician, hospital and ambulatory surgical center payments (ASCs) for 2010. The draft recommendations will be formally voted on at MedPAC’s January meeting and are subject to change. MedPAC discussed inpatient and outpatient hospital payments and concluded they should increase in 2010 by the hospital market basket index concurrent with implementation of a quality incentive program.

MedPAC discussed the physician update for 2010, recommending the update should be the projected change in input prices (2.4 percent) less the commission's expectation for productivity growth (1.3 percent) for an update of 1.1 percent. There was a lot of discussion about not including the productivity adjustment language so this recommendation could change next month.

MedPAC continues to address payments for practice expenses from MRI and CT machine usage. The commission noted that Medicare payments are currently based on lower equipment usage than is currently occurring in practice. Changing the equipment usage calculations could shift millions of dollars in the physician fee schedule from imaging services to other services. The savings could also be returned to the Medicare trust fund depending on what Congress does with MedPAC’s recommendation.

MedPAC discussed several possible options for updating ASC payments for 2010, including using the Consumer Price Index-Urban, The Consumer Price Index-Urban minus a productivity adjustment, or having no update. ASC updates have been frozen since 2003 and there is no update scheduled until 2010 under the new ASC payment system tying ASC rates to hospital outpatient department rates. MedPAC also discussed whether ASCs should begin providing cost reports to allow for collection of cost data.

MedPAC is an advisory body to Congress and, as such, Congress is not bound to accept the commission’s recommendations. However, Congress does review and consider the commission’s suggestions. Detailed information and reports may be found at www.medpac.gov.