The CMS should test ways to link hospital reimbursements to quality of care, the Medicare Payment Advisory Commission said in its latest report to Congress. Reinforcing a message delivered repeatedly by CMS Administrator Tom Scully, MedPAC said providers that deliver the best care for the lowest cost should be rewarded with higher payments. Nearly three-fourths of the variability in hospital inpatient margins reflects "management choices and other factors" outside Medicare's prospective payment system, MedPAC said. One-fourth stems from payment factors that are unevenly distributed among hospitals, such as indirect medical education, disproportionate-share and sole-community hospital payments. A "small portion" of variation reflects PPS adjustments for cost variables, such as case mix and wage index, MedPAC said. The advisory panel also endorsed competitive bidding for durable medical equipment, a feature of the Medicare prescription drug bill being debated in the Senate this week. -- by Jeff Tieman
MedPAC: Tie hospital payments to quality
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