The Medicare Payment Advisory Commission (MedPAC) urged the federal government to limit cuts required by the “fiscal cliff” deal in order to leave hospitals with a 1% payment increase for inpatient and outpatient care in fiscal year 2014. The 1% payment increase would technically be a reduction from the scheduled 1.8% increase in inpatient payments and 2% increase in outpatient payments established by a pre-existing legislative formula.
MedPAC’s final recommendation to Congress was largely in line with their recommendation in December. However, MedPAC noted that the final recommendation does not take into account the potential 2% reimbursement cuts to Medicare required by budget sequestration, which were delayed until March under the fiscal cliff deal. The final recommendation would increase Medicare hospital spending by $750 million to $2 billion over one year and by $5 billion to $10 billion over five years.