MedPAC Finalizes Payment Adequacy Recommendations at January Meeting

At a public meeting held Jan. 16-17, the Medicare Payments Advisory Commission (MedPAC) heard presentations on hospital payment adequacy and finalized recommendations to include in its March 2026 report to Congress.

These presentations focused on cost-sharing at critical access hospitals, physician payments, and Medicare inpatient and outpatient services. The commission also heard updates on the status of the Medicare Part D prescription drug program, ambulatory surgical centers, and Medicare Part C.

Before the meeting, America's Essential Hospitals shared with the commission concerns with the proposed methodology for the Medicare Safety-Net Index (MSNI).

MedPAC finalized the following recommendations:

• Congress should increase physician payment rates by 0.5 percentage points above current law in 2027.
• Congress should update the Medicare base payment rates for general acute-care hospitals by the amount specified in current law for 2027.
• Congress should implement the MSNI, with $1 billion added to the MSNI pool for 2027.
• Congress should reduce the 2026 Medicare base payment rates for skilled nursing facilities by 4% in 2027.
• Congress should reduce the 2026 Medicare base payment rate for home health agencies by 7% in 2027.
• Congress should reduce the 2026 Medicare base payment rate for inpatient rehabilitation facilities by 7% for CY 2027.
• Congress should eliminate the update to the 2026 Medicare base payment rates for hospice in CY 2027.

A full summary of the discussion is available to members of the America's Essential Hospitals Federal Action Network (FAN). To access this summary and other policy resources, join the FAN today.

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.