HRS Monitoring MedPAC’s Recommended Medicare Payment Updates and Policies

December 19, 2024 – HRS continues to monitor recommendations from the Medicare Payment Advisory Commission (MedPAC), which could influence the direction of Medicare payment policies over the coming years.

On November 7th and 8th, MedPAC Commissioners discussed several topics which will be highlighted in MedPAC’s June 2025 Report to Congress, including reforms to the Medicare physician fee schedule (MPFS). As part of the discussion, Commissioners expressed general support for eliminating the differential payment updates between the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Model (Advanced APM) participants (+0.25% vs. + 0.75%, respectively) and replacing it with a general MPFS update that would be a percentage of the Medicare Economic Index (MEI). MedPAC will vote on this and other recommendations in the Spring of 2025 before delivering its report to Congress next June.

On December 12th and 13th, Commissioners reconvened to discuss MedPAC’s recommendations for Medicare payment updates in 2026, a process that, by law, the Commission is required to conduct annually. In formulating its recommendations, the Commission evaluates several factors, including beneficiary access, quality of care, and provider revenue and margins.

During the December meeting, Commissioners discussed a recommendation to increase MPFS payments by the MEI minus 1 percentage point in CY 2026, along with the creation of a safety-net add-on payment. While Commissioners were generally supportive of the recommendation, several Commissioners voiced concern for making MEI minus 1 percentage point a long-term policy, noting negative impacts on access to care, sustainability, and the physician workforce.

Commissioners also considered a recommendation to set the Medicare base payment rate for acute care hospitals as the amount specified in current law plus 1 percentage point. This recommendation also includes adding $4 billion in additional funding and redistributing existing disproportionate share hospital and uncompensated care payments through a new Medicare Safety-Net Index pool. Commissioners largely supported the recommendation.

The Commission will vote on these and other Medicare payment update recommendations during the next MedPAC meeting on January 16-17, 2025. The recommendations will also be included in MedPAC’s March 2025 Report to Congress.

While MedPAC advises on Medicare payment updates on an annual basis, Congress and CMS (to the extent allowed under statute) ultimately have the authority to set payment updates. HRS continues to advocate for a permanent inflationary update for Medicare physician payments to improve stability in the health care sector and ensure providers are adequately reimbursed for their services.

Available Resources

• MedPAC November 2024 Public Meeting – Main Page
• MedPAC November 2024 Public Meeting – Transcript
• MedPAC November 2024 Public Meeting – Presentation