A congressional Medicare advisory panel last week supported a projected 0.7% increase in hospital Medicare inpatient payments for fiscal 2000 while rejecting an expected Clinton administration call for a smaller increase.
The Medicare Payment Advisory Commission said its calculations found that Medicare inpatient payments should increase between zero and 2.6% for the fiscal year starting Oct. 1. That recommendation will be included in MedPAC's annual March report to Congress.
Under the 1997 balanced-budget law, hospitals are projected to receive an increase for fiscal 2000 equal to the rate of inflation in the hospital sector-called the hospital "marketbasket"-less 1.8 percentage points.
The marketbasket is projected to be 2.5%, leaving an increase of 0.7%.
But the Clinton administration is expected to call for a smaller increase than the legislative mandate when it releases its fiscal 2000 budget in February.
While details are not yet known, that rate might be marketbasket minus 2 percentage points for fiscal years 2000 through 2004.
As support for its proposal, the administration has cited recently released MedPAC data showing that hospitals are enjoying high profit margins on care for Medicare inpatients.
MedPAC commissioners opposed the Clinton administration plan, arguing that further reductions are not warranted for fiscal 2000.
"There is nothing to suggest that further cuts are needed," said commission Chairwoman Gail Wilensky.
Commissioner Spencer Johnson, president of the Michigan Health and Hospital Association, said Medicare inpatient margins increased because of hospital cost-cutting measures, a trend that may not continue.
"Will hospitals be able to keep costs flat?" Johnson asked. "Everything we've seen shows that was the low point and (costs) will start creeping back up."
MedPAC's dismissal of the deeper reductions proposed by the Clinton administration came as music to the American Hospital Association's ears. The AHA has mounted a campaign opposing further cuts (See related story, p. 2).
Two years ago, MedPAC recommended that Medicare hospital inpatient payment rates be frozen, a proposal later adopted as part of the 1997 balanced-budget law.
Carmela Coyle, AHA senior vice president for advocacy and representation, said that by opposing further reductions, MedPAC had "gone a long way toward guarding against the manipulation of (its) recommendation" by lawmakers seeking further spending reductions.