HRA Monitoring MedPAC Payment Update Recommendations for 2026

February 4, 2025 – HRA continues to monitor Medicare Payment Advisory Commission’s (MedPAC) recommendations for Medicare payment updates in 2026, which were voted on during the Commission’s January meeting.

Commissioners overwhelmingly supported increasing Medicare Physician Fee Schedule payments by the Medicare Economic Index (MEI) minus 1 percentage point in CY 2026, along with the establishment of a safety-net add-on payment.

Additionally, Commissioners supported setting the Medicare base payment rate for acute care hospitals as the amount specified in current law plus 1 percentage point and recommended the creation of a Medicare Safety-Net Index to more effectively direct resources to hospitals serving underserved populations.

These recommendations, along with other recommended Medicare payment updates, will be featured in MedPAC’s March 2025 Report to Congress. In addition to voting on the recommended payment updates, the Commission also discussed several other topics, including ambulatory surgical centers (ASCs). While not making any specific recommendations as part of the ASC status update discussion, the issue of “site neutral” payments between ASCs, hospital outpatient departments (OPDs), and physician office settings was raised. While there was support for further consideration of payment policies that would work toward reducing financial incentives to treat patients in certain settings rather than the best clinical setting, several commissioners cautioned MedPAC from damage that could be done by underpaying hospitals who might be treating sicker or riskier patients and who maintain a higher care delivery cost structure.

To better assess future recommendations, most commissioners agreed that ASCs should begin to submit cost reports so that payment adequacy in ASCs and ASC payments relative to other sites of service can be better assessed.  The full MedPAC meeting materials are available online. The next MedPAC meeting will be held March 6-7, 2025.

Although MedPAC provides annual recommendations for Medicare payment updates, the final authority to set these updates rests with Congress and CMS (to the extent allowed under statute). HRA continues to advocate for a permanent inflationary update for Medicare physician payments to enhance stability in the health care sector and ensure providers are adequately reimbursed for their services.

Available Resources

• MedPAC January 2025 Public Meeting – Main Page
• MedPAC January 2025 Public Meeting – Transcript
• MedPAC January 2025 Public Meeting – Presentation