Medicare Reimbursement Update Act of 1989

Medicare Reimbursement Update Act of 1989 - Amends title XVIII (Medicare) of the Social Security Act to require the Secretary of Health and Human Services to annually update hospital area wage index factors (used in determining the amount of Medicare payments to be made to hospitals for wage-related costs) using the most current data available.

Increases, by one percent of total annual Medicare payments for hospital discharges, the minimum and maximum percentage of such payments which may represent outlier payments compensating hospitals for exceptionally long or costly hospitalization.

Directs the Secretary to report to the Congress within 60 days after this Act's enactment on steps taken in establishing a data base of the operating costs of Medicare inpatient hospital services, a standardized electronic hospital cost reporting format, and a demonstration project to determine the feasibility of establishing a uniform hospital reporting system.

Prohibits the Secretary from determining the amount of Medicare payments to be made to health maintenance organizations (HMOs) on the basis of an average of payments in previous years. Repeals the prohibition against risk-sharing contract between the Secretary and HMOs which have had such contracts terminated at their request within the preceding five years. Makes the annual per capita payment rate for each class of HMO member equal to, rather than 95 percent of, the adjusted average per capita cost for that class. Requires the Director of the Health Care Financing Administration to submit a specific legislative proposal to the Congress by September 1, 1990, for taking into account variations in severity of illness and case complexity in determining Medicare payments to HMOs.

Requires Medicare carriers, fiscal intermediaries, and peer review organizations to provide providers, practitioners, and suppliers with at least 30-days advance notice of policy changes affecting Medicare payments.

Establishes the Task Force on Medicare Reimbursement of Health Maintenance Organizations which shall: (1) periodically review the methodology employed in determining Medicare (HMO) payment rates; (2) document and report on discrepancies between actual and projected HMO costs; and (3) assess alternative methodologies for determining Medicare HMO payment rates. Sets forth reporting requirements. Authorizes appropriations for such Task Force. Terminates the Task Force on January 2, 1993.