On December 6, 2012, the Medicare Payment Advisory Commission (MedPAC) issued draft recommendations for Medicare payment update factors for 2014.  MedPAC, which advises Congress on issues affecting Medicare, included recommendations for inpatient and outpatient hospitals, skilled nursing facilities, inpatient rehabilitation facilities, long term care hospitals, hospice, and ambulatory surgical center services (ASCs).

Among other changes, the recommendations would increase Medicare payment rates for hospitals in FY 2014 by 1%.  This rate is .8% less than the statutory update—with the purpose of allowing HHS to recoup past documentation- and coding adjustment- based overpayments to hospitals.

Further, MedPAC also called for a repeal of the sustainable growth rate formula (SGR), which is to cut Medicare physician payments by 26.5% starting on Jan. 1.  Instead of the SGR formula, MedPAC suggested ten years of statutory payment updates.  MedPAC also issued recommendations for a .5% payment increase for ASCs in 2013.  Additionally, it recommended it be mandatory for ASCs to submit cost data starting in CY 2014.

The complete list of draft recommendations are:  

Rate Year 2014

Provider                                                           Draft Recommendation

Hospitals - Inpatient & Outpatient                    Net Payment Update by 1.0%  

Skilled Nursing Facilities                                  No Market Basket Update for FY2014 - Rebase

Home Health                                                    No Market Basket Update for FY2014 - 2Yr Rebase  

Physicians                                                        Reiterate October 2011 SGR repeal letter to Congress

Ambulatory Surgery Centers                           Update by 0.5%  

Dialysis                                                             No Market Basket Update for FY2014

Hospice                                                            No Market Basket Update for FY2014  

Long-Term Care Hospitals                              No Market Basket Update for FY2014

Inpatient Rehabilitation                                    No Market Basket Update for FY2014  

The final recommendations will be voted on at the January 17, 2013 MedPAC meeting, and will be included in MedPAC’s annual Medicare Payment Policy Report to Congress in March.

For more information, please click here.