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MedPAC Finalizes Payment Adequacy Recommendations at January Meeting

January 28, 2025
Evan Schweikert

The Medicare Payment Advisory Commission (MedPAC) met Jan. 16 and 17 to vote on proposed recommendations related to payment adequacy for a range of services and facilities.

The commission made the following recommendations to Congress for 2026:

  • To calculate payment rates for physician and other health professional services, use the Medicare Economic Index minus 1 percentage point.
  • For inpatient and outpatient services, increase base Medicare payment rates by 1 percent from, add $4 billion to the uncompensated care pool, and redistribute disproportionate share hospital and uncompensated-care payments through the Medicare Safety-Net Index.
  • Reduce base payment rates for skilled nursing facilities by 3 percent.
  • Reduce base payment rates for inpatient rehabilitation facility services and home health care services by 7 percent.
  • Eliminate the 2025 update for hospices, decreasing payments by $250 to 750 million per year.

MedPAC recommended no changes to the current outpatient dialysis law.

Commissioners also discussed, finalized, and heard updates related to their 2025 report, and received updates on growth and access to ambulatory service center care, the Medicare Advantage program, and changes in spending and quality of the prescription drug program.

Additionally, the commission discussed cost-sharing for outpatient services at critical access hospitals and heard a draft recommendation related to capping coinsurance costs for patients.

This was the fifth public meeting of the commission’s 2024–2025 meeting cycle.

Members of the America’s Essential Hospitals Federal Action Network (FAN) can access a full summary of the discussion. To access this summary and other policy resources, join the FAN today.

Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.

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