MedPAC Recommends Hospital Reimbursement Increase

January 19, 2022 - The Medicare Payment Advisory Committee (MedPAC) has voted to recommend increases to hospital reimbursement for both inpatient and outpatient services in fiscal year (FY) 2023.

MedPAC convened virtually on Jan. 13th and 14th to discuss Medicare reimbursement recommendations to be included in their March 2022 Report to Congress. As part of the meeting, the group talked about hospital reimbursement adequacy.

According to the American Hospital Association (AHA), MedPAC agreed to recommend a 2.5 percent increase for inpatient hospital reimbursement and a 2.0 percent increase for hospital outpatient reimbursements in FY 2023.

The recommendation was based on MedPAC’s payment adequacy framework, which takes into account Medicare beneficiary access to care, quality of care, hospital access to capital, and Medicare reimbursement and hospital costs.

MedPAC analysts shared in a presentation on Jan. 13th that the COVID-19 pandemic significantly impacted Medicare payment adequacy for hospitals this last year. Although just how much the public health emergency affected payment adequacy indicators was difficult to determine, they said.

The analysts suggested that MedPAC consider for the draft recommendation that Congress maintain payments high enough and close to hospital costs to ensure beneficiary access to efficient delivery of high-quality care. At the same time, payments should “maintain fiscal pressure on hospitals to constrain costs,” according to the presentation.

Additionally, the analysis advised MedPAC to consider minimizing the differences in payment rates across sites of care for similar services.

In addition to hospital reimbursement hikes, the AHA also reported that MedPAC recommended to include in the in the March 2022 Report to Congress:

• A 5.0 percent reduction in Medicare reimbursement for skilled nursing facilities, home health agencies, and inpatient rehabilitation facilities
• No further update to the 2023 Medicare reimbursement rates for long-term care hospitals
• No further update to the 2023 Medicare reimbursement rates for physicians and other healthcare professionals
• Requirement for clinicians to use a claim modifier to identify audio-only telehealth services
• Elimination of the 2023 update to the Medicare conversion factor for ambulatory surgical centers
• Elimination of the 2023 update to the Medicare base payment rates for hospice providers and a requirement for these providers to report telehealth services on Medicare claims

Congress takes MedPAC recommendations into account when developing Medicare reimbursement policy but does not have to execute the recommendations. MedPAC is an independent, non-partisan legislative branch agency that advises Congress on issue impacting administration of the Medicare program.