The government's official Medicare payment advisory panel yesterday recommended an increase of up to 2.5 percent in fiscal 1986 in Medicare payment rates to hospitals, even though the White House has asked that the payments be frozen.
If Congress approves the recommendation, the extra payments to hospitals would come to about $750 million.
Stuart Altman, dean of the Florence Heller Graduate School at Brandeis University and chairman of the government's 15-member Prospective Payment Assessment Commission, said the recommended increase for fiscal 1986 could be less than 2.5 percent above fiscal 1985 Medicare case rates if medical inflation rates are not as high as expected.
The increase is designed to make up for increases in equipment and supplies hospitals must buy, after taking into account technological and productivity changes and certain other factors. The commission, meeting at the Shoreham, adopted the recommendation by voice vote.
Commission member Harold A. Cohen, director of the Maryland hospital rate-setting commission, said the net figure of about 2.5 percent was reached by first allowing an increase to cover inflation in the cost of the so-called medical "market basket," expected to be 4.5 percent. This figure was then decreased by about 1 percent for productivity, product changes and technological changes. Then another 1 percent was taken off to get rid of apparent increases in case severity which, in fact, result from record-keeping changes.
The recommendation is not binding on either Congress or the secretary of health and human services. But as an objective assessment by a nonpartisan committee of experts, it will provide support for pleas by hospitals that Medicare rates should not be frozen.
The commission was created by Congress in 1983 at the same time it created the new prospective-payment system for Medicare, in which fixed rates for 468 types of cases are set. The law stated that before setting the new rates for Medicare for the coming fiscal year, the secretary must take into account -- though not necessarily adopt -- the commission's recommendations. This is the first year the commission has operated.
Although the commission had not met to formulate its final recommendations when President Reagan's budget came out in January, the budget proposed that the rates be frozen and stated that this would be done by administrative action as permitted by law. However, it is likely Congress will write a provision deciding the issue.