MedPAC Recommends 1.7% Increase In Medicare Physician Reimbursements In 2008

The Medicare Payment Advisory Commission on Wednesday voted unanimously to approve a recommendation to Congress to increase reimbursements to doctors by an estimated 1.7% in 2008, CQ HealthBeat reports. Without action from Congress, physician reimbursements in 2008 would decrease by 10% under the current payment formula. MedPAC calculated the new figure using expected 2008 “input prices” — the expenses that go into providing physician services — and expected increases in physician productivity. Commissioners also agreed that a $1.35 billion “Physician Assistance and Quality Initiative Fund” created by Congress late last year should be used to fund the 2008 payment update. American Medical Association Chair Cecil Wilson said that his group “concurs with MedPAC’s recommendation that Congress stop the 2008 payment cut and update payments in line with medical practice cost increases.” MedPAC also approved a recommendation to Congress that reimbursements for long-term care hospitals not be increased in 2008 and that payments for inpatient rehabilitation services be increased by 1% (Reichard [1], CQ HealthBeat, 1/10).

Hospital Inpatient Care
In related news, MedPAC Executive Director Mark Miller said that bonus payments for high quality inpatient hospital care, which were recommended by the commission earlier this week, could be considerably higher than 1% or 2% (CQ HealthBeat, 1/10). MedPAC voted unanimously to give hospitals a full “market basket” increase in FY 2008 payments for inpatient and outpatient care. The payment increase — currently projected at 3.1% — would be tied to the adoption of a “quality incentive payment program” (Kaiser Daily Health Policy Report, 1/10). Miller said the HHS secretary would determine the size of the bonus payments (CQ HealthBeat, 1/10).

Nursing Homes
The nursing home industry has expressed opposition to MedPAC’s recommendation that Congress freeze their reimbursement levels in 2008. MedPAC released data showing that profit margins on Medicare beneficiaries in skilled nursing facilities will average 11% in 2007. However, nursing home advocates say that is “not an excuse for freezing Medicare payments because Medicaid payments fall far short of the cost of care they provide for Medicaid patients,” CQ HealthBeat reports. Alan Rosenbloom, president of the Alliance for Quality Nursing Home Care, said the recommendation “would undermine the great strides skilled nursing homes have taken to improve the quality of care and provide a fair wage to hundreds of thousands of caregivers.” American Health Care Association CEO Bruce Yarwood said that “long term care funding stability in conjunction with reasonable inflation adjustments are the critical policy prescriptions necessary for our profession to sustain … the rigorous and comprehensive quality improvement initiatives under way in our nation” (Reichard [2], CQ HealthBeat, 1/10).
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