Congress’ primary Medicare advisory body recommended last week that HHS Secretary Kathleen Sebelius should limit hospital cuts she was required to make under a year-end fiscal cliff law to leave those facilities with a 1% payment increase next fiscal year.

The Medicare Payment Advisory Commission (MedPAC) unanimously recommended that Congress direct Sebelius to increase inpatient and outpatient prospective payments by the 1%, which is technically a reduction from the pre-existing legislative formula that said hospitals should receive a 1.8% increase starting next October.

Under the year-end American Taxpayer Relief Act of 2012, Sebelius was required to find $11 billion in savings from hospitals within four years through rate reductions. If the cut was evenly spread out over the four years—as the Congressional Budget Office assumed it would be—then it would reduce the fiscal 2013 update to a 0.6% cut.

However, if the MedPAC recommendation is followed, Medicare hospital spending would increase in the next fiscal year by up to $2 billion, according to the advisory body. Link to the full article here.