A congressional advisory panel late last week considered key changes in how the government annually adjusts Medicare payments to hospitals, physicians and managed-care plans.
The Medicare Payment Advisory Commission's proposals seek to more accurately pay providers for treating or covering beneficiaries.
Should Congress follow through on MedPAC's recommendations, hospitals, physicians and HMOs could see increases or decreases in their payments depending on a number of factors, including spending trends, legislative action and the populations they serve.
MedPAC may begin including projected revenue increases or losses resulting from new Medicare laws or regulations that aren't yet reflected in hospitals' bottom lines. Historically, that has not been a factor in MedPAC's consideration of the hospital inpatient update.
The news for physicians, who already have seen several changes in Medicare's payment policies since 1992, wasn't any better.
MedPAC is considering a recommendation that Congress repeal the use of an annual expenditure growth target for physician payments that HCFA uses to limit Medicare spending on physician services.
Some MedPAC members said the current system is inconsistent with the way Medicare pays other providers for their services, namely, by using prospective payment systems.
It's unclear what would happen if Congress scrapped the current spending target system.
Finally, MedPAC said it's supporting HCFA's plan for implementing a risk-adjustment mechanism for paying Medicare HMOs beginning in 2004.
In an upcoming report to Congress, MedPAC will say that HCFA's plan to gather data on patient-care costs from physicians, outpatient departments and hospital inpatient units will allow Medicare to pay HMOs more accurately for the expected costs of the patients they enroll.