Noteworthy News

MedPAC Considers FY 2016 Pay Boost for Inpatient, Outpatient Payments

Medicare payments to hospitals for inpatient and outpatient care could rise 3.25 percent in the coming fiscal year.

new medpacAt least that is what members of the Medicare Payment Advisory Commission (MedPAC) discussed recommending to Congress when they met last week in Washington.

During MedPAC’s two-day public meeting, members discussed recommending to Congress a 3.25 percent increase in Medicare inpatient and outpatient payments in FY 2016.   They will vote on their recommendation at their next meeting.

A presentation to MedPAC members by their staff also offered a number of observations about Medicare services:

  • Demand for hospital services is stable.
  • With hospital occupancy down to 60 percent, it appears hospitals have excess capacity.
  • The quality of care hospitals provide is improving according to several metrics.
  • Hospital cost growth is down.
  • Hospitals’ Medicare margins are steady, although they remain negative, especially for outpatient services, with non-profit hospitals averaging Medicare margins of -6.9 percent and for-profit hospitals averaging Medicare margins of +1.2 percent.
  • MedPAC should consider recommending policies to reduce or eliminate differences between payments to hospitals and doctors’ offices for selected outpatient services.

On the subject of hospitals’ Medicare margins, the presentation showed urban hospitals to be among the weakest performers, with average Medicare margins of -5.9 percent.  The Medicare margins of non-profit hospitals, moreover, were much worse than those of for-profit hospitals:  -6.9 percent compared to +1.2 percent.  All urban safety-net hospitals are non-profit.

The National Association of Urban Hospitals (NAUH) has expressed opposition in the past to the site-neutral payments for outpatient services discussed during the meeting.

For a closer look at the Medicare inpatient and outpatient issues MedPAC examined at its December meeting, see the presentation on this subject here, on MedPAC’s web site.


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