UPDATE 1-U.S. Medicare panel urges insurer payment cuts

* Recommendations from independent panel are non-binding

* Cuts also urged for home healthcare

* Healthcare legislation includes cuts to several sectors (Adds industry comments)

WASHINGTON, March 1 (Reuters) - Medicare should cut U.S. government payments to private insurers and home healthcare providers, an advisory panel said in nonbinding recommendations released on Monday.

The Medicare Payment Advisory Commission, or MedPac, repeated its earlier call for the federal government to pay private insurers that offer coverage known as Medicare Advantage the same as it pays when Medicare reimburses providers directly.

The commission "remains concerned that Medicare's payments to (Medicare Advantage) plans will again exceed" Medicare's fee-for-service program, a statement from the panel said.

The panel "reiterates its recommendation for financial neutrality" between both types of payments, the statement said.

MedPac is an independent body that makes nonbinding recommendations to Congress on Medicare, the federal health insurance plan for nearly 44 million elderly and disabled Americans.

Congress is considering cuts to Medicare Advantage and other sectors as part of the stalled healthcare reform legislation. President Barack Obama is set to announce this week how he wants Democrats to proceed on the measure.

Providers of Medicare Advantage include Humana (HUM.N) and UnitedHealth Group (UNH.N). Insurers say the plans offer extra benefits that aim to coordinate care or boost wellness.

"Significant cuts to the Medicare Advantage program will result in higher premiums, reduced benefits and fewer health care choices for millions of seniors," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, an industry group.

MedPac's report also said home health payments needed to be "significantly reduced." Home health companies include Gentiva Health Services Inc (GTIV.O) and Amedisys Inc (AMED.O).

William Dombi, a vice president at the National Association for Home Care and Hospice, said the industry is "concerned about lack of access to care" if providers cannot absorb rate cuts. While the Senate bill phases in lower payments over four years, the MedPac recommendation, if adopted, "would give providers no chance of adjusting to these cuts," he said.

The Medicare panel recommended flat or slightly higher reimbursements for other sectors.

The report was posted here. (Reporting by Lisa Richwine; Editing by Lisa Von Ahn, Leslie Gevirtz)