Panel recommends smaller Medicare increases for hospitals

Tuesday, January 18th 2005, 1:29 pm

By: News On 6

WASHINGTON (AP) _ A Medicare advisory group is recommending to Congress that it curb projected increases to hospitals in 2006 and freeze payments to nursing home and home care agencies.

The Medicare Payment Advisory Commission, in a vote of its 17 members last week, said Congress should increase payment for inpatient and outpatient hospital services by 2.8 percent, 0.4 percentage points under what hospitals would be entitled to under current budgetary estimates of rising costs.

The commission also approved recommendations that doctors who treat Medicare patients get an increase of 2.7 percent in 2006, less than the 3.5 percent assumed under current budget estimates but in contrast to a 5.2 percent cut doctors could face under existing payment schedules if Congress does not act.

The panel, made up of representatives from various aspects of health care, presents its recommendations to Congress in March as part of a semiannual report. Lawmakers make final decisions on payment updates for the entitlement program, which covers nearly 42 million seniors and disabled people. Congress is under particular pressure to hold down spending this year because of mounting federal budget deficits.

Medicare spending rose 7.6 percent in 2002 and was up 5.7 percent in 2003, to $283 billion.

If the commission's recommendations are accepted, Medicare would save between $200 million and $600 million in inpatient payments and between $50 million and $200 million in outpatient payments in 2006. Over five years, the savings would be between $1 billion and $5 billion for inpatient service and less than $1 billion for outpatient service.

Similar savings could be realized with a freeze on nursing home and home care agency payments.

Chip Kahn, president of the Federation of American Hospitals, said the commission's recommendations were ``unfortunate'' because ``its own data indicated that hospitals were generally not doing well on the Medicare side of their patient load.''

He said the new payment formula would be particularly hard on the two-thirds of hospitals that are either losing money or barely getting by.

But Dr. John Nelson, president of the American Medical Association, welcomed the recommendations for a payment increase for doctors, saying in a statement they will ``help physicians continue to treat Medicare patients.''

He said that under current formulas the Medicare trustees have predicted payment cuts of 31 percent over the next eight years, when the costs of running a practice will go up 19 percent. ``If the flawed formula is not replaced, physicians may have to make hard choices about treating new Medicare patients,'' he said.