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MedPAC recommends 1 percent pay increase for doctors, hospitals

The Medicare Payment Advisory Commission voted last week to recommend to Congress a 1 percent increase in Medicare hospital inpatient and hospital outpatient prospective payment system rates for 2012, in addition to a 1 percent pay rate increase for physicians.

The Medicare pay rate increase for physicians would include office visits, surgical procedures and therapeutic services in all settings. The recommendations will be part of an official report that MedPAC will deliver to Congress in March.

At a public meeting held January 13 and 14 in Washington, D.C., MedPAC analysts reported their most recent findings on Medicare payments and access to care.

Cristina Boccuti said the government paid $69 billion in 2009 for Medicare fee-for-service. In 2009, there were 1 million practitioners in Medicare's registry, half of which were physicians, while the rest included nurses, physical therapists and chiropractors. The physicians billed 90 percent of the reimbursements paid out by Medicare to practioners in 2009, Boccuti said. Ninety-seven percent of Medicare fee-for-service beneficiaries received at least one fee schedule service in 2009.

Boccuti said physicians and beneficiaries are expressing "mounting frustration" over the current sustainable growth rate formula used to calculate physician reimbursement rates under Medicare. She said they're also frustrated with the host of temporary "fixes" that Congress continues to pass and the looming 21 percent Medicare physician pay cut.

According to a 2010 physician access survey conducted by MedPAC, most Medicare beneficiaries ages 65 and older report better access to care than beneficiaries of private insurance between the ages of 50 and 64. Medicare beneficiares are able to get timely appointments with their physicians and can find a new physician when they need one, the survey found.

Contrary to reports, the MedPAC survey found that only 7 percent of both groups surveyed said they were looking for a new physician last year. Those who were looking for a new physician said it was harder to find a primary care provider than a specialist. Boccuti recommended MedPAC explore ways to increase access to primary care for Medicare beneficiares.

According to a MedPAC analysis of 2009 Medicare claims, hospital reimbursements were up 6 percent per Medicare FFS beneficiary. MedPAC analyst Jeff Stensland said access to hospital inpatient and outpatient care was strong and quality remained steady. In 2009, the government spent $114 billion on inpatient FFS, he said.

According to Stensland, Congress phased in MS-DRGs (Medicare severity-diagnosis related-groups) and cost-based weights in 2007-2009 that were meant to improve hospital reimbursement accuracy. The MS-DRGs were supposed to create financial incentives to better document and code secondary diagnoses, yet there was an unintended consequence. Docmentation and coding improvements increased Medicare hospital reimbursements without any real change in patient care or the complexity of patients' illnesses, he said. By law, the coding improvements and MS-DRGs must be budget-neutral. A 3.9 percent adjustment is needed to stop the overpayments resulting from the coding changes, he said.

Stensland said MedPAC should recommend that Congress recover overpayments made to hospitals since 2007, but adjustments shouldn't be made all at once, to avoid "a large financial shock" to hospitals.

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