Health Information Management

News: MedPAC chair unveils full ?market basket? update proposal for inpatient payments

CDI Strategies, December 9, 2010

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The Medicare Payment Advisory Commission (MedPAC) considered a draft recommendation from its chair, Glenn M. Hackbarth, JD, calling for a full “market basket” update of 2.6% for fiscal year 2012 inpatient hospital payments, AHA News Now reported on December 2. Hackbarth’s proposal comes with a 1.6 % reduction to reflect a mandatory documentation and coding offset, for a final update of 1%.

MedPAC provides Congress with year-by-year recommendations for appropriate updates to reimbursement that are “consistent with the efficient delivery of services” regardless of setting. The “market basket” update is used to adjust hospital payments for inflation.
“So our charge is to make a recommendation at this cycle for fiscal year 2012,” Hackbarth said, according to transcripts from the meeting.
The meeting transcript also contains some discussion on the effect of improved documentation and coding, including the following:
“As expected, adoption of MS DRGs gave hospitals incentives to improve diagnosis documentation and coding, and those improvements raised measured case-mix and payments in the inpatient payment system. We expect and encourage hospitals to improve documentation and coding; however, Medicare's total payments should not increase because the change in case-mix measurement did not alter the real underlying complexity of patients or the treatment costs for patients admitted for inpatient care.”
“While we continue to believe that the coding adjustment for inpatient payments is too high, we are pleased MedPAC did not recommend applying both the coding offset and the productivity cut,” said American Hospital Association Vice President for Policy Don May, in the AHA article.
Hackbarth’s draft recommendations are expected be revised before the commission votes on them in January.

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