MedPAC recommends 3.3% raise to hospitals in 2021

MICHAEL BRADY  / January 16, 2020

The Medicare Payment Advisory Commission on Thursday voted unanimously to recommend hospitals receive a 3.3% raise in 2021.

The CMS has scheduled a 2.8% pay raise to hospitals for inpatient and outpatient services. MedPAC recommended that Congress increase net payments by 3.3% but change the structure of the pay boost to close the gap between reimbursement rates for physician offices and hospital outpatient departments. They also recommended incentivizing hospitals to reduce mortality and improve patient satisfaction by tying some of their raise to quality improvements.

The commission needs to find a way to make sure that hospitals are more accountable for the total cost of care, said MedPac Commissioner Dana Safran, head of measurement for Haven, the healthcare venture formed by Amazon, Berkshire Hathaway and JPMorgan Chase.

“(MedPAC is allowing hospitals) to thrive on fee-for-service revenue,” she said.

If Congress followed MedPAC’s recommendation, Medicare base payment rates to acute care hospitals would increase by 2%, which is 0.8% lower than the current plan. That loss would be offset by corresponding financial rewards under the hospital value incentive program. The commission also recommended eliminating current quality penalties, which should increase hospital payments by 0.5%.


Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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