MedPAC Reviews Medicare Payment for Physician and Hospital Services

The Medicare Payment Advisory Commission (MedPAC) met on Dec. 4 and 5 to discuss Medicare payment accuracy and updates for physician services and hospital inpatient and outpatient services. MedPAC staff presented a draft recommendation that Congress should increase physician payment rates by 0.5 percentage points for 2027. However, the 2027 payment rate would be less than 2026 payment, due to the expiration of the One Big Beautiful Bill Act’s (P.L. 119-21) one-time 2.5% payment increase. Commissioners largely supported the recommendation but emphasized the need to improve the underlying payment system to maintain appropriate access to care for Medicare patients. 

MedPAC staff then presented an update on “site-neutral” payments, identifying clinic visits in on-campus hospital outpatient departments (HOPDs) and services in excepted HOPDs as opportunities to expand so-called site-neutral polices. Commissioners also reviewed draft recommendations for hospital inpatient and outpatient service payment, recommending Congress update the 2026 Medicare base payment rates for general acute care hospitals by the amount specified in current law for the 2027 payment rates. This is a departure from recent years’ recommendations to include an additional percentage increase. The recommendation further urged Congress to adopt the Medicare Safety-Net Index (MSNI) from MedPAC’s March 2023 report and allocate an additional $1 billion to the MSNI pool. 

Lastly, MedPAC staff presented a mandated report to Congress on Rural Emergency Hospitals (REHs), finding an increase in adoption of the new hospital designation with 44 REHs operating in 2025, up from 21 in 2023.