The Medicare Payment Advisory Commission (MedPAC) is an independent, federally commissioned congressional agency that advises Congress on ways to improve Medicare. The Commission kicked off 2024 with its first set of public meetings, where commissioners worked through potential draft recommendations for Congress to consider. The meetings focused on a myriad of Medicare-related issues, including payment adequacy, prescription drugs, outpatient care, and health equity. Click here for a full transcript of the policy discussions.

MedPAC unanimously approved its draft recommendation to bolster physician payment rates.

The Commissioners found that while physicians accepted patients with Medicare at similar rates to their commercial counterparts, the costs of providing care have increased. MedPAC recommended:

• Increasing base payment rates under the CY 2025 Physician Fee Schedule (PFS) by 50% of the projected increase to the Medicare Economic Index (MEI). If the MEI would increase by 2.6% in 2025, the PFS payment rates would increase by 1.3%.
• Enacting the clinician 15% add-on payment to primary care and a 5% increase for all others caring for beneficiaries enrolled in the Part D low-income subsidy program.

The Commission also further explored the Medicare Safety-Net Index, which MedPAC believes should replace the Disproportionate Share Hospital (DSH) payment program. Commissioners recommended for DSH and uncompensated care payments to be redistributed through the Medicare Safety-Net Index (MSNI), an idea that continues to raise concerns for hospitals serving America’s safety net since the methodology doesn’t account for Medicaid patients. Fee-for-service MSNI payments would be paid in proportion to each hospital’s MSNI and distributed through an add-on payment to inpatient and outpatient payments. Payments for MA enrollees’ care would be made directly to the hospital. The policy idea would require an addition of $4 billion to the MSNI pool and is estimated to cost between $5 and $10 billion annually. No commissioners voted against this recommendation; two members, Dr. Brian Miller and Kenny Kan, abstained from voting.

What’s next?
MedPAC Chair Commissioner Dr. Michael Chernew cautions that while access issues cannot be solved by payment changes alone, the policy community should expect “plenty of other work” on payment reform this spring, including more recommendations on site-neutral payments. MedPAC will be sending a report to Congress in March with these recommendations. Congress is not obligated to adopt any of the recommendations and given that is an election year we also don’t expect major legislative changes to the safety net definition or the DSH program. The report is likely to fuel more conversations related to site-neutral payments and the need for physician payment reform.