MedPAC Backs 1% Pay Increase for Hospitals in 2012 - January 19, 2011

On Jan. 13, the Medicare Payment Advisory Commission (MedPAC) unanimously voted to recommend that Congress provide a 1% hike in reimbursement for hospital inpatient and outpatient services in 2012. The increase would be less than an increase that some had expected of 2.5% in fiscal year 2012. MedPAC’s lowered recommendation aims at recovering overpayments due to “documentation and coding improvements” (DCIs). At the same time, MedPAC determined not to make a productivity adjustment in 2012, which would further reduce payments, because they believe that the DCI adjustment will sufficiently address spending concerns. MedPAC estimates that in 2012, the 1% increase will result in an additional spending of $250 million to $750 million, but across five years, it will save between $1 billion and $5 billion from recoupment of overpayments.