WASHINGTON – The Medicare Payment Advisory Commission recommended this week that Congress give hospitals a fiscal year 2011 payment update equal to the rate of change in the market basket index, currently projected at 2.4 percent, concurrent with implementation of a pay-for-performance program.

"MedPAC estimates that Medicare reimbursements are nearly 6 percent below cost, and a full market basket update is a minimum step required to ensure the continued patient access to non-profit hospitals," said Blair Childs, senior vice president of public affairs for the Premier healthcare alliance. "Congress should consider these realities as it finalizes the historic healthcare reform legislation."

The commission also recommended that Health and Human Services Secretary Kathleen Sebelius reduce the inpatient update by up to 2 percent in 2011, 2012 and 2013 to reflect changes in documentation and coding, which would result in an inpatient update of just 0.4 percent in FY 2011.

"We're pleased that MedPAC recommended a full market basket update," said Don May, vice president of policy at the American Hospital Association. "However, we are disappointed with the commission's coding offset recommendation, since (the Centers for Medicare and Medicaid Services)  already has authority to apply an offset and has suggested using a less aggressive transition in its 2010 rule."

Additionally, MedPAC recommended that Congress give physicians a 1 percent payment update in FY 2011, and repeated previous recommendations to increase fee-for-service payments for practitioners who focus on primary care.

MedPAC also recommended that Congress provide no payment update in fiscal year 2011 for inpatient rehabilitation facilities, long-term care hospitals, skilled nursing facilities or home health providers.

For home health, the commission said Congress also should direct the Health and Human Services secretary to rebase rates to reflect the average cost of providing care; expeditiously modify the home health prospective payment system to protect beneficiaries from stinted or low-quality care; identify groups of beneficiaries most likely to benefit from home health and develop outcomes measures for quality of care; and review home health agencies with unusual patterns of claims and implement safeguards in areas that appear to be high risk.

For hospice providers, the commission recommended that Congress provide a 2011 payment update of market basket minus productivity.