Medicare Payment Advisory Commission - MedPAC

Healthcare Financial Management, May, 2001

The payment update for hospitals in FY02 should remain at the level specified by current law, the Medicare Payment Advisory Commission (MedPAC) asserted in a March 1 report to Congress. Current law (the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act) sets the FY02 payment update for inpatient hospital services at 0.55 percent below the market basket.

MedPAC reported that overall financial status of hospitals improved significantly in FY00 from the previous two years. MedPAC attributed poor results in FY98 and FY99 to Medicare payment cutbacks, declining payments from private payers, and losses from divestitures of poorly performing business lines. The FY00 upturn was credited to hospitals' ability to negotiate better payment terms with private payers.