News: MedPAC recommends 3.3% raise for hospitals in 2021

The Medicare Payment Advisory Commission (MedPAC) voted unanimously to recommend hospitals receive a 3.3% raise in 2021.

CMS has already scheduled a 2.8% raise to hospitals for inpatient and outpatient services, but MedPAC recommends that congress increase net payments even more. Additionally, they recommend changing the structure of payment boost to close the gap between reimbursement rates for physician offices and hospital outpatient departments.

MedPAC also recommends giving hospitals incentives to reduce mortality and improve patient satisfaction by tying a portion of the raise to quality improvements. If congress follows the recommendations, Medicare base payment rates to acute care hospitals would increase by 2%, which is 0.8 percentage points lower than the current agreed-upon plan. That loss would be offset by corresponding financial rewards under the hospital value incentive program.

In addition to tying part of the bonus to quality measures, MedPAC also recommends eliminating the current quality penalties, which would increase hospital payments by 0.5%. This proposal would lead to an increase from $750 million to $2 billion in 2021, and $5 billion to $10 billion over five years.

The new payment structure would not affect Medicare beneficiaries’ access to care or providers’ willingness to deliver care, according to MedPAC staff, who believe it would also help to control hospital cost growth and reward high-performing hospitals.

Currently there is no planned pay increase for doctors in 2021, but clinicians who participate in the merit-based incentive program should be eligible for a 7% adjustment and an exceptional performance bonus said MedPAC. Physicians who participate in an advanced alternative payment model could receive a 5% incentive payment under the current plan.

Editor’s note: The MedPAC meeting brief can be found here. A more in depth article about this vote can be found here.