The news from Washington last week was good-but not great-for hospitals, which won a recommendation for a full inflation inpatient update for rural and small-city hospitals, as well as a full inflation update for hospital outpatient department reimbursements, in 2003.
But congressional officials warn that a return to deficit spending-amounting to as much as $772 billion over 10 years if Medicare and Social Security tax collections aren't counted-will make it hard for lawmakers to turn the recommendations into law.
The Medicare Payment Advisory Commission, which met last week to discuss its 2003 recommendations, due to Congress March 1, supported a full inflation update for rural facilities and hospitals in metropolitan areas of less than 1 million people, which get a base rate that's 1.6% less than the rate for facilities in large cities.
The recommendation would affect more than two-thirds of U.S. hospitals.
Large-city hospitals, however, would be stuck with an inpatient update of 0.55% less than the inflation measure known as the marketbasket index, which is estimated at 2.9%. That lower update will apply to all hospitals under a 2000 law unless Congress heeds MedPAC's recommendations.
MedPAC decided to give the larger update to rural and small-city hospitals to help equalize the 1.6% difference in the base rates they receive, although MedPAC staff said the bigger update will eliminate only one-third of the differential.
The recommendation of a full inflation update for Medicare hospital outpatient department payments affirms law set in 1997.
The American Hospital Association said the higher rates for small-market hospitals could represent a five-year bonus of up to $1 billion for about 3,000 hospitals.
Carmela Coyle, the AHA's senior vice president for policy, applauded MedPAC's decision but said that the 2.35% update for urban hospitals "still doesn't cover the cost increases" faced by those hospitals.
Elizabeth Fowler, a top Democratic health aide to the Senate Finance Committee, said committee Chairman Max Baucus (D-Mont.) is "very interested in that, but it's going to come down to money."
Deborah Williams, a Republican aide to the House Ways and Means Committee's health subcommittee, questioned whether increasing Medicare payments to hospitals was preferable to paying for beneficiaries' prescription drug needs in a time of deficit.