MedPAC Issues FY 2014 Payment Recommendations for Inpatient and Outpatient Hospitals, LTCHs, Hospices and ASCs

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The Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency established to advise Congress on issues affecting the Medicare program, recently voted on FY 2014 payment recommendations for: (1) inpatient and outpatient hospitals; (2) long-term care hospitals (LTCHs); (3) hospices; and (4) ambulatory surgical centers (ASCs).  The payment recommendations will be published in MedPAC’s March 2013 report to Congress.  MedPAC’s final recommendations incorporate the impact of cuts to hospitals under the American Taxpayer Relief Act (ATRA) but do not take into account the potential 2 percent reimbursement cuts to Medicare required by budget sequestration.

MedPAC unanimously voted to recommend a 1 percent payment increase for all inpatient and outpatient hospital services in FY 2014.  MedPAC’s recommendation was largely consistent with its proposed payment recommendation issued in December 2012.  Should Congress accept MedPAC’s inpatient and outpatient hospital payment recommendation, Medicare inpatient hospital spending would increase by $750 million to $2 billion over one year and by $5 billion to $10 billion over five years. 

MedPAC recommends no payment rate changes for hospices and LTCHs.  MedPAC explained that it does not believe that hospices and LTCHs require payment updates in FY 2014 because these providers have adequate access to capital and beneficiaries would not be adversely affected if the payment increases were eliminated. 

Additionally, MedPAC recommends no payment increases for ASCs in FY 2014.  This recommendation differs from MedPAC’s proposed 0.5 percent increase discussed in December 2012.

Although briefly addressed in its recommendations, MedPAC did not recommend that payments for evaluation and management services provided in the outpatient setting be reduced to match payments for such evaluation and management services paid under the physician fee schedule.

Reporter, Stephanie F. Johnson, Atlanta, +1 404 572 4629, sfjohnson@kslaw.com.

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