HRA  Monitoring  MedPAC  Recommendations on Physician Payment Reform

April 1, 2025 – MedPAC, which advises Congress on Medicare payment policy issues, met in early March to discuss a range of topics, including several key recommendations which will be included in its June 2025 Report to the Congress.

Notably, Commissioners discussed two draft recommendations for Congress aimed at reforming Medicare physician payments. The first recommendation calls for replacing current-law updates to the physician fee schedule (PFS) with a single annual update tied to a portion of the Medicare Economic Index (MEI). The second recommendation directs the Secretary to improve the accuracy of the PFS relative payment rates by updating cost data regularly and ensuring the methodology used for setting different payment rates reflects the setting in which clinicians practice medicine. Commission staff highlighted that the second recommendation is designed to (1) update the allocation of work, practice expenses (PE), and malpractice components used in setting relative value units (RVUs); (2) improve the accuracy of global payment codes; and (3) improve the accuracy of relative payments for indirect PE. MedPAC plans to revisit and vote on these recommendations at its next meeting on April 10-11, 2025. The full MedPAC meeting materials from March are available online.

Finally, MedPAC released its March 2025 Report to Congress, which assessed the adequacy of payments across the Medicare payment systems and made recommendations to Congress on how those payments should be updated for 2026. Consistent with discussions at past MedPAC meetings, the Commission recommended that Congress increase Medicare PFS payments by the MEI minus 1 percentage point in calendar year (CY) 2026 and establish a safety-net add-on payment.

While MedPAC makes annual recommendations on Medicare payment updates, the final authority to implement these changes rests with Congress and CMS (to the extent allowed under statute). HRS and HRA remain committed to advocating for a permanent inflationary update for Medicare physician payments to enhance stability in the healthcare sector and ensure providers are adequately reimbursed for their services.