WASHINGTON--If Medicare spending growth is left unchecked, the program will absorb "unprecedented shares" of the gross national product and federal spending, the Medicare Payment Advisory Commission warned last week.

In its semiannual report to Congress, MedPAC said that changes to the program should include better calibration of provider payments and the rewarding of efficiencies.

"The last strategy--increasing efficiency--is the most desirable because it would enable the Medicare program to do more with its resources," the report said. Medicare should "pay no more than what is required to obtain quality services and good access to care."

The report said efficient providers are those that "use fewer inputs to produce quality outputs."

One of MedPAC's recommendations included freezing Medicare payment rates in 2007 for home health agencies, which the American Association for Homecare called "unwarranted, unjust and unsound" in a formal response last week.

"For MedPAC to suggest anything that continues to undercut the financial underpinnings of the home health benefit is simply beyond the pale at a time when the first wave of the baby boomers will begin retiring in the next 18 months and will be depending on Medicare," said AAHomecare COO Sue Mairena.

To view the report, visit www.medpac.gov.

To view AAHomecare's response, visit www.aahomecare.org.