Most members of the group that advises Congress on Medicare seem to favor a small increase to hospital payments, but clashed with a report predicting hospitals will get back to normal after the COVID-19 pandemic.
"I think there is going to be more long-lasting impact to the hospitals that we probably can't even fathom right now," said Commissioner Wayne Riley, a president of the State University of New York Downstate Health Sciences University
The Medicare Payment Advisory Commission gathered virtually Thursday to hammer out Medicare payment policy recommendations for hospitals and surgery centers that it will submit to Congress in March for fiscal year 2022.
Commissioners of the influential advisory group seemed largely supportive of the draft recommendation that calls for a base payment increase of 2% for acute care hospitals.
They wanted to steer away from drastically changing base rates as a means to extend help to providers grappling with the coronavirus pandemic, which slashed patient volumes this year. Instead, commissioners urged targeted relief — opting against lasting payment changes as part of the annual update.
Commissioners leaned on the MedPAC staff report with detailed hospital financial performance to guide their recommendation. That report showed hospital profitability for Medicare services has improved over time in recent years.
Still, the average hospital does not turn a profit on its Medicare book of business, according to data from MedPAC. The average Medicare margin for all hospitals that receive Medicare payments through the Inpatient Prospective Payment System was -8.7% for 2019, an improvement from -9.3% the year prior, and -10% in 2017.
However, the average Medicare margin for relatively efficient hospitals (which the commission did not identify or characterize) had a median Medicare margin of -1% in 2019.
Some commissioners seemed to take issue with the staff's assertion that they "do not anticipate any long-term changes that will persist past the end of the public health emergency" for the sector and urged caution around rate setting.
Geisinger CEO Jaewon Ryu also disagreed with the long-term outlook, casting doubt on the rosy picture for the sector after the pandemic. Ryu said he's more comfortable with the proposed increase due to the hospital value incentive program that could bump payments to hospitals based on performance. MedPAC recommended the change to Congress in a previous March report.
"I get that we can have contingent recommendations, but I think it's that HVIP that to me landed in that comfortable range, without that I'm not so sure I'd be there," Ryu said.
Though some commissioners were puzzled why the group would consider an increase given the improved margin performance over time.
Bruce Pyenson, principal and consulting actuary at Milliman, said, "I see very little reason for increase in payment rates, especially an increase that's above consumer price index. So, I'm really puzzled at the recommendation for increases. I think we have an opportunity to not increase payments."