MedPAC Discusses Physician Fee Schedule, Alternative Payment Models, Part D, and MA

The Medicare Payment Advisory Commission (MedPAC) met on Nov. 7 and 8. The commission met to discuss the Medicare Physician Fee Schedule (PFS), incentives for participating in advanced alternative payment models (A-APMs), prescription drug plans (PDPs), and Medicare Advantage (MA) provider networks.

Commissioners acknowledged that updates to PFS payment rates no longer keep pace with inflation. They supported reforming current law transition in calendar year 2026 to a differential conversion factor update based on participation in A-APMs to instead establish a single conversion factor and base annual updates on a portion of inflation growth based on the Medicare Economic Index. Staff also reviewed three potential policy considerations to improve payment accuracy for physician services. However, commissioners were not fully aligned on whether to take on more granular payment accuracy policies given the potential policy landscape shifts that could occur with a new Congress and administration.

MedPAC also discussed whether extending the participation bonus, set to expire at the end of the year, was appropriate or necessary to encourage participation in A-APMs. Staff presented two options for modifying bonus payment calculations should the bonus be extended. While some commissioners felt it was no longer appropriate to provide a participation bonus, others believed that the bonus was still necessary to assist with start-up costs and serve as a bridge for smaller practices that might otherwise be unable to participate in an A-APM. The chair will determine whether to offer a recommendation this cycle.

Related to prescription drugs, commissioners discussed a breakdown and analysis of the structural differences between PDPs and MA-PDs that have contributed to recent trends and concerns with stability in the PDP market. Trends raising concerns about PDP market stability included higher enrollee premiums in PDPs than MA-PDs, fewer premium-free PDPs for Part D Low-Income Subsidy beneficiaries, higher gross costs and lower risk scores in PDPs, and a higher likelihood for PDPs to include losses than MA-PDs. As a next step, MedPAC will further analyze the effect of coding patterns on Part D risk scores and the impact of different incentives and funding sources on coverage and formulary design. These findings will be presented in the spring. Further on MA, commissioners discussed provider networks and a work plan to further analyze and discuss in the next meeting cycle beginning in fall 2025. The future work plan aims to better understand provider participation in MA networks, enrollee use of MA provider networks including out-of-network care, and MA network adequacy.