The Medicare Payment Advisory Commission rebuffed two American Hospital Association-backed proposals to raise rural hospital inpatient payment rates by as much as $10 billion in the next five years.
MedPAC decided last week that its report on rural healthcare, due out in June, will not recommend boosting labor-cost reimbursement for hospitals in low-wage areas. The AHA had proposed putting a floor under the wage index, which increases inpatient rates for hospitals in high-wage areas and decreases them for hospitals in low-wage areas. MedPAC also rejected raising the inpatient payment rates of rural hospitals to those of big-city hospitals.
MedPAC did, however, vote to recommend two new adjustments to rural hospital payments, worth about $200 million a year, including an increase in Medicare disproportionate-share payments and a special payment adjustment to hospitals with fewer than 500 discharges a year.
MedPAC also is calling on HCFA to study whether current Medicare labor reimbursement policies accurately reflect hospitals' actual labor costs. AHA officials said changing that policy could shift up to $2 billion in Medicare reimbursement from urban to rural hospitals over five years.