MEDPAC Report Recommends Rate Increase for Physician Services

In its March 2010 report to the Congress, the Medicare Payment Advisory Commission (MedPAC) recommends that the Congress update payments for physician services by 1 percent in 2011. They also recommended increases in payment rates for the acute inpatient and outpatient prospective payment systems (PPS) in 2011 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program. To recapture overpayments to hospitals resulting from the conversion to Medicare severity diagnosis-related groups, MedPAC recommends reduced payment rates in the inpatient PPS by the same percentage (up to 2 percentage points) each year in 2011, 2012, and 2013. The lower rates would remain in place until overpayments are fully recovered.

The principal focus of the report is MedPAC’s recommendations for annual rate adjustments in fee-for-service (FFS) Medicare. These updates are based on an assessment of payment adequacy taking into account beneficiaries’ access to care, supply of providers, the quality of the care they receive, and Medicare margins.

MedPAC recommends that the Congress update payments for physician services by 1 percent in 2011. The commission calls for a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. MedPAC recommends no update to payment rates for skilled nursing facilities in FY11. The report also recommends a 0.6 percent increase in payments for ambulatory surgical center services in CY11 concurrent with requiring ASCs to submit cost and quality data.