MedPAC Reviews Medicare Payment Oversight, MA’s Impact on Hospital Finances 

The Medicare Payment Advisory Commission (MedPAC) met on Sept. 4 and 5 to discuss Medicare payment accuracy, oversight to ensure sustainability, context for Medicare payment, and the impact of Medicare Advantage (MA) enrollment on hospital finances.  

The payment operations and accuracy session included an overview of the various contractors who enroll providers, process claims, perform prior authorizations and pre-claim approvals, and post-payment reviews and audits, including the Innovation Center model beginning in 2026 [refer to Washington Highlights, July 3]. Commissioners noted an interest in better understanding how various contractors interact and the varying payment structures and incentives across contractor services. The following session with the U.S. Comptroller General Gene Dodaro continued the theme of payment accuracy and the role of the Government Accountability Office in advising Congress and improving government programs and services.   

Commission staff presented updated analysis of Medicare payment and funding to provide fresh context regarding Medicare spending. The analysis included an observable decline in spending in Medicare Part A services, funded through payroll taxes, and increased spending on Part B, funded through general government revenues and premiums, which is likely to make health care less affordable for Medicare patients. Commissioners focused their discussion on a new analysis regarding health care consolidation and workforce concerns, notably health care workers who are not directly reimbursed under Medicare fee schedules and payment systems.  

Lastly, MedPAC staff presented on the association between MA enrollment and hospital financing as a greater share of Medicare eligible beneficiaries enrolled in MA plans. On average, the commission found increases in MA enrollment are not associated with statistically significant changes with hospital profit margins but were associated with lower hospital revenue and costs. However, this varied by ownership status depending on whether hospitals and plans were financially integrated or not. Financially integrated hospitals did not show large revenue changes when MA grew, but non-financially integrated hospitals did experience revenue and cost declines. The commission also discussed the positive correlation between MA enrollment and the amount of uncompensated care-based payments per discharge, in both fee-for-service and MA.