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2012 MedPAC Report

By March 29, 2012Commentary

The latest report to Congress on Medicare payment policy from MedPAC is as usual a lengthy compendium of issues and data.   (MedPAC Report)   The report summarizes the thinking of this important body on a variety of health care problems which have applicability beyond Medicare.  Perhaps the biggest single dollar item dealt with once again is the Sustainable Growth Rate formula for paying physicians and the Commission once again lays out its recommendation for changing that payment mechanism.  In another move affecting doctor payments, the Commission recommends harmonizing reimbursement to physicians for office visits and for visits to hospital outpatient departments.  Currently 80% more is paid for the same visit in the hospital outpatient setting, incenting hospitals, who increasingly own and employ doctors, to move care to that setting.  The Commission also noted that beneficiary access to physicians appears to still be good, but has registered slight declines in each of the past few years, a worrisome trend.

While hospital margins on Medicare appear to be overall negative, the Commission found that well-run, efficient hospitals have a positive margin.  The Commission also believes that hospitals have been using coding changes to get paid more, while not really treating sicker patients, and that these overpayments should be recovered in future payment updates.  In regard to ambulatory surgery centers, MedPAC says Congress needs to begin collecting cost data immediately and should provide only a nominal payment update for 2013.  In the skilled nursing arena, the Commission suggests that very high profit margins exist and Congress needs to change the payment structure and begin reducing reimbursements.  The same issue exists with home health care, and similar payment reductions for that sector are recommended.  In regard to part D, MedPAC suggested changes to encourage beneficiaries to utilize generic drugs.  In a general observation the Commission notes that spending for Medicare is a major contributor to the national deficit and debt and even if the growth rate slows from past increases, it is still at an unsustainable level, making it critical to avoid unnecessary care and find new payment methods beyond fee-for-service.

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