The Medicare Payment Advisory Council (MedPac) is made up of experts who study all the details of Medicare. Each year MedPac presents a report to Congress on Medicare that includes recommendations for changes to the program.

Here is information on hospitals and Medicare from the March 2012 MedPac report:

Inpatient admissions declined 1 % each year from 2004 to 2010 while hospital outpatient services increased 4 percent each year.

From 2009 to 2010, Medicare payments per beneficiary for inpatient and outpatient services in acute care hospitals grew by over 3 percent. As a result, 4,800 hospitals received $153 billion for roughly 10 million Medicare inpatient admissions and 166 million outpatient services.

Hospitals lost money on Medicare.

Overall aggregate Medicare profit margins improved from −7.1 percent in 2008 to −4.5 percent in 2010.  Although the average hospital lost money on their Medicare patients, MedPac found that efficient hospitals operated with a 4 percent profit margin in 2010.

The Commission recommends that the Congress increase payment rates for the inpatient and outpatient services in 2013 by 1 %.

Hospitals were overpaid by Medicare.

Hospitals’ documentation and coding changes led to over-payments in 2010, 2011, and 2012. Therefore, updates must be lowered to recover these over-payments (even though most hospitals lose money on their Medicare patients).

The March 2012 MedPac report can be found here:

http://www.medpac.gov/documents/Mar12_EntireReport.pdf