Last week, the Medicare Payment Advisory Commission (MedPAC) submitted its annual report to Congress in which it recommended increasing certain hospital payments and urged lawmakers to overhaul the sustainable growth rate (SGR) formula.

The 443-page report recommends that Congress increase hospital inpatient and outpatient care payments by 1% in fiscal year 2013. MedPAC also calls for reducing payments for evaluation and management visits in hospital outpatient departments to the rate of free-standing physicians’ offices across three years.

In addition, the report recommends a 0.5% payment increase for ambulatory surgical centers, a 1% payment increase for outpatient dialysis services, and a 0.5% payment increase for hospice services.

MedPAC continued to urge Congress to repeal the SGR formula and replace it with a 10-year path of statutory fee-schedule updates. Specifically, the panel recommended freezing current primary care payment levels, and reducing payment levels for all other services by 5.9% annually for three years, followed by a freeze.