MedPAC is the nonpartisan government research service that provides Congress with policy suggestions to ensure Medicare funds are well spent and the program’s beneficiaries have adequate access to care. Although Congress does not always immediately accept or implement MedPAC’s recommendations, the commission’s annual reports offer healthcare providers a look at future changes in payment policy that are bound to be on the table at some point.

This year’s reports—released in March and June—are no different. They include a number of proposals that could affect payment for inpatient, outpatient, and physician services, and the June report contemplates changes to the Medicare benefit structure. Providers should understand how these proposals will affect them and develop strategies to mitigate their impact.

Medicare severity-adjusted DRG (MS-DRG) documentation and coding adjustment. MedPAC believes that recent growth in the national average case mix index is not related to an increase in the severity of the illness burden of patients seeking care, but to hospitals responding to the economic incentives embedded in the MS-DRG system to improve documentation and coding. FFY12 is the last year that the Centers for Medicare & Medicaid Services (CMS) is legally compelled to recoup alleged overpayments related to services provided in FFY08 and FFY09. However, MedPAC firmly states that CMS should recoup additional overpayments related to 2010 and 2011, which would currently require an additional estimated 2.4 percent adjustment to future market-basket updates. This change would translate into an approximately $2.4 billion additional reduction in Medicare payments for these two years alone. The odds of Congress taking action on this proposal are high, given the need for savings to reduce the deficit and offset the budgetary impact of fixing the sustainable growth rate (SGR).

Continued on hmfa.org