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MedPAC Discusses Updates to Hospital Inpatient and Outpatient Base Payment Rates

December 10, 2021

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CONTACTS
Andrew Amari, Hospital Policy and Regulatory Specialist

The Medicare Payment Advisory Commission (MedPAC) met on Dec. 9-10 to discuss the commission’s draft recommendations related to payment adequacy and payment updates for inpatient and outpatient hospital services, among other topics.

MedPAC staff members presented on payment adequacy for inpatient and outpatient hospital services across four key indicators, including beneficiary access to care, quality, hospital access to capital, and Medicare payments compared to hospital costs. Using the most recently available data (from 2020), staff found that payment adequacy across these indicators is generally positive. Still, Medicare margins at inpatient prospective payment system hospitals remained negative in 2020 (-8.5%) but increased slightly from -8.7% in 2019. However, for both inpatient and outpatient payments, commission staff did not anticipate any long-term changes that would affect payment adequacy beyond the COVID-19 public health emergency (PHE). The staff noted that highly variable COVID-19 effects would best be addressed through targeted, temporary funding policies rather than changes to the base payment rate.

Also presented by MedPAC staff was a draft recommendation to commissioners that Congress update the Medicare base payment rate for acute care hospitals by the amount determined under current law for fiscal year 2023, which currently provides for a 2% update. During the discussion, commissioners generally expressed support for the draft recommendation. However, several commissioners highlighted the need to monitor several ongoing supply chain and staffing issues that may impact payment adequacy and persist beyond the end of the PHE. In particular, hospitals’ continued need for personal protective equipment, staffing issues, and the impending recoupment of accelerated payments may need to be considered in the future. Notably, several commissioners suggested the attrition of nursing staff may be more concerning than currently expected given the high rate of senior nursing staff leaving the workforce. Staff will present updated recommendations and commissioners will formally vote on the draft recommendation at the January 2022 meeting for inclusion in the 2022 March Report.

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