The Medicare Payment Advisory Commission (MedPAC) held a public meeting in Washington, DC January 8-9, 2009 to finalize its recommendations to Congress for updating physician, hospital and ambulatory surgical center payments (ASCs) for 2010. Payment recommendations adopted by MedPAC will be formally presented in a report to Congress in March of this year. Visit the MedPAC website to view the meeting's agenda, handouts and transcripts.

Update for Hospital Services
The Commission voted to recommend an increase in inpatient and outpatient hospital payments by the full market basket index concurrent with implementation of a quality incentive program, which would increase payments by 2.7 percent.

A second recommendation proposed to lower certain add-on payments to teaching hospitals, which would reduce Medicare IME (indirect medical education) payments by one percentage point per 10 percent increment in the ratio of hospital beds at a facility to its medical residents. This would help pay for the quality incentive payments.

The reduction would provide roughly $1 billion for pay-for-performance and allow for more focused and accountable use of funds. In addition, it would reduce the margin gap between major teaching and non-teaching hospitals by up to 2 percentage points, as well as move IME payments closer to the patient-care cost associated with training residents.

Update for Physician Services
A 1.1 percent update for physician services in 2010 was agreed to by the Commission. In addition, the Commission re-voted on a recommendation from June 2008 not yet adopted that would establish a budget-neutral payment adjustment for select primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. Primary-care-focused practitioners are defined as those whose specialty designation is primary care and others in medical practices that focus mainly on primary care.

The Commission also agreed to a recommendation that would increase the equipment use standard for expensive imaging machines from 25 to 45 hours per week to redistribute RVUs from imaging devices, such as MRI and CT scanners, to other physician services.

Update for Ambulatory Surgery Centers (ASC)
An increase in payment rates for ASC services in 2010 by 0.6 percent was approved. In addition, MedPAC recommended that ASCs should be required to submit cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.