MedPAC Recommends Update
for Physician Payments; Approves Other Recommendations
January 17, 2003 - At their Jan. 15 meeting, Medicare
Payment Advisory Commissioners (MedPAC)
decided to approve officially the recommendation that they
discussed during their December 2002 meeting for a 2.5 percent
update to the Medicare Physician Fee Schedule for 2004. The
positive update reflects a projected increase in input prices
of 3.4 percent less 0.9 percentage points for estimated productivity
growth. This recommendation, along with recommendations on
hospital and other provider Medicare payments, will be included
in MedPAC's March 2003 Report to the Congress on Medicare
payment issues. The Commissioner voted down a potential recommendation
that would have reduced Medicare indirect medical education
(IME) payments (see related article).
In discussing the physician recommendation, MedPAC staff presented
data showing that physician participation in the Medicare
program rose steadily between 1997 and 2002, but noted that
it is too early to tell whether participation will fall due
to the Medicare payment reductions in 2002 and 2003.
In the hospital arena, Commissioners voted to recommend a
payment update equal to the increase in the hospital market
basket (currently forecasted at 3.3 percent for 2004) less
0.4 percentage points. The reduction reflects a 0.5 percentage
point estimate of cost increases due to technology less 0.9
percentage points for productivity improvements. Commissioners
approve a hospital outpatient PPS update of the market basket
increase MB increase less the 0.9 percentage point productivity
factor. No adjustment was made for new technologies under
the outpatient PPS because these items are accounted for separately
under the payment system.
In another policy of importance to teaching hospitals, the
Commission voted to recommend that CMS add 13 diagnosis-related
groups (DRGs) to the current 10 DRGs, which are subject to
the post-acute transfer policy and the reevaluate the impact
before expanding the policy further. This recommendation was
adopted in place of a recommendation that would have added
the 13 DRGs as part of a three-year phase-in that would expand
the policy to all DRGs.
The Commission also made recommendations in a number of other
areas, including:
- rural hospitals
- skilled nursing facilities,
- home health agencies,
- ambulatory surgical centers, and
- new technologies.
Information:
Denise Dodero, Associate Vice President
AAMC Health Care Affairs
ddodero@aamc.org
(202) 828-0493
Karen Fisher, Senior Associate Vice President
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
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