A federal commission's recommendation to increase Medicare inpatient hospital payments to rates higher than those sought by providers has raised some questions in Congress about the panel's independence.
While Gail Wilensky, the chairwoman of the Medicare Payment Advisory Commission, defends the action as consistent with past commission practice, the top Republican and Democratic members of a congressional subcommittee governing Medicare are questioning whether the commission was hijacked by hospital interests (April 24, p. 8).
Indeed, three of MedPAC's 17 members are top executives at healthcare systems or hospital groups: Spencer Johnson, president of the Michigan Health and Hospital Association, Floyd Loop, M.D., chief executive officer and board chairman of the Cleveland Clinic Foundation, and John Rowe, M.D., president and CEO of Mount Sinai-NYU Hospitals/Health System.
Others on the board head physician practices, managed-care plans and home-health agencies, although under the law that created the commission, healthcare providers cannot constitute a majority of the commission. The bulk of the panel must be healthcare researchers, economists and beneficiary representatives.
Some Capitol Hill aides are also concerned that providers may be lobbying commissioners in much the same way that they lobby members of Congress.
Lawmakers who rely on MedPAC for advice are faced with a paradox: They want appointees who are on medicine's front lines and know how Medicare affects healthcare delivery. But by appointing such experts, Congress has given them power to make recommendations that if implemented could benefit them or their institutions.
"Interest in the results of policymaking is part and parcel of a commission like that," says Stuart Guterman, MedPAC's former deputy director and now a principal research associate at the Urban Institute in Washington. "What's important is how they balance their roles as statespeople when they sit on the commission."
That was the implicit question in a letter signed by Reps. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee, and Fortney "Pete" Stark (D-Calif.), the panel's senior Democrat.
In demanding data to support MedPAC's recommendation of a 3.5% to 4% update in Medicare inpatient hospital payment rates for 2001--1.1 percentage points more than the most liberal request from hospital groups--Thomas and Stark questioned whether the commission had become "the voice for self-interested lobbying."
That update would represent a swing of up to 2.2 percentage points in favor of hospitals. Under the provisions of the Balanced Budget Act of 1997, Medicare hospital inpatient payments would be set at 1.1 percentage points below a measurement of hospital cost inflation called the "marketbasket" index, now estimated at 2.9%.
"Since the commission's recommendation will undoubtedly cause many hospital representatives to visit Congress requesting a higher update than current law or pending legislation provides, we would like to consider such updates with the benefit of hard data--not anecdotes," the letter said.
Stark and Thomas want detailed information dating to 1996 on Medicare costs, margins and other economic data.
In response to those inquiries, Wilensky says the commission's recommendation followed the past procedure of assessing changing costs, practice patterns and hospital profits before deciding on its update recommendation. That framework first was established by the Prospective Payment Assessment Commission, or ProPAC, a panel that merged with another commission to become MedPAC.
But Wilensky acknowledged that the response from Capitol Hill has spurred commissioners and staff to assess whether changes are needed in the procedure for setting its recommendation.
"Given that we clearly found ourselves in a position we didn't expect, we're asking, `Is there something that this model isn't capturing?' " Wilensky says.
Stuart Altman, who chaired ProPAC from its inception in 1983 through 1996, says the commissioners in the past have done a good job of balancing their public and private roles.
"My experience is that the group was grounded in data, was far less political than Congress and tended to rely heavily on staff," he says.
Hospitals are asking for a 2.9% update to inpatient payments in 2001, equal to the marketbasket index.
In developing its higher update recommendation, MedPAC added to the marketbasket half a percentage point for scientific and technical advances, mostly increases in drug costs, and another half a point to offset past reductions for expected upcoding that never materialized.
Because of members' concerns about hospitals' declining financial situation, MedPAC decided not to keep to its recent practice of subtracting from the update recommendation to account for services being shifted from hospital beds to post-acute-care and outpatient settings.
Medicare inpatient hospital profits dropped to 14.4% in 1998 from 17% in 1997 because the balanced-budget law imposed a freeze on hospital inpatient payments at 1997 levels, according to a MedPAC analysis.