The Medicare Payment Advisory Commission (MedPAC) has issued its annual report to Congress on Medicare payment policy. Key recommendations include the following:

  • For inpatient and outpatient hospital services, updates equal to the hospital market basket, implemented concurrently with a quality incentive payment program. MedPAC also recommends reducing indirect medical education (IME) payment by 1 percentage point.
  • An update to the physician fee schedule equal to the increase to “input prices” less MedPAC’s adjustment for productivity growth (1.5% for 2009). In addition, Congress should require CMS to establish a process to measure and report physician resource use on a confidential basis.
  • For the outpatient dialysis payment system, an update equal to the projected market basket change less a 1.5% adjustment for productivity growth. MedPAC continues to recommend that Congress implement a quality incentive program for dialysis providers and expand the dialysis payment bundle to include dialysis drugs and other commonly-furnished services.
  • No payment increase for three of the four post-acute care payment systems: skilled nursing facilities (SNFs), home health agencies, and inpatient rehabilitation facilities. In addition, MedPAC recommends a quality incentive program and improved public quality reporting for SNFs. For the fourth post-acute payment system, long-term care hospitals, MedPAC recommends an increase of the market basket index less a productivity growth adjustment.
  • MedPAC makes a series of recommendations with regard to private plans, including Medicare Advantage plans and special need plans. With regard to Part D drug plans, the Commission recommends that the Congress should direct the Secretary to make Part D claims data available regularly and in a timely manner to congressional support agencies and selected executive branch agencies for purposes of program evaluation, public health, and safety (for example, post market surveillance).

While MedPAC’s recommendations are not binding on Congress, lawmakers are expected to consider the recommendations as they seek to develop a plan to avert the 10.1% Medicare physician reimbursement cut now scheduled to go into effect July 1, 2008.