Last week’s MedPAC meeting culminated in a set of formal recommendations that will be shared with Congress as part of the Commission’s statutory duty to assess Medicare payment adequacy and recommend updates for fiscal year (FY) 2027.  

Update Medicare Hospital Payments by Current Law
MedPAC voted for Congress to update Medicare’s hospital inpatient and outpatient prospective payment systems (PPS) for FY 2027 by the amounts required under current statute rather than proposing additional increases. This reflects the Commission’s assessment of beneficiary access, quality and provider cost pressures.  

Modest Increase for Physician and Other Health Professional Services
For physician and other clinician services, MedPAC recommended that Congress increase payment rates for 2027 by current-law updates plus an additional 0.5 percentage points. Under this proposal, clinicians in Advanced Alternative Payment Models would see a 1.25% payment increase, with others receiving a 0.75% update — slightly above statutory levels but still below broad cost inflation. Commissioners emphasized their desire to preserve access to care but acknowledged ongoing concerns about Medicare payment adequacy relative to rising practice costs.  

Payment Reductions for Post-Acute Care Providers 

  • Home Health Agencies (HHAs): recommended a 7% reduction to payment rates in 2027, citing high margins in the current system and cost pressures.  
  • Skilled Nursing Facilities (SNFs): recommended a 4% cut to Medicare SNF payments for FY 2027. 
  • Inpatient Rehabilitation Facilities (IRFs): recommended reducing IRF payments by 7%, continuing prior draft proposals.  

Status Reports on Key Medicare Programs
While not formal recommendations, Commissioners also reviewed or discussed status reports on: 

  • Medicare Advantage (MA), including persistent concerns about substantial overpayments relative to fee-for-service Medicare and coding incentives.  
  • Medicare Part D prescription drug market trends, including higher plan bids and premium implications.  
  • Ambulatory Surgical Centers and other care settings, offering data to inform future policy considerations.  

These recommendations will be included in MedPAC’s March 2026 Report to Congress, shaping legislative deliberations on Medicare payments for 2027.