MedPAC Releases March 2025 Report to Congress on Medicare Payment Policy 

The Medicare Payment Advisory Commission (MedPAC) released its March 2025 Report to Congress, which evaluates payment adequacy and issues payment recommendations across seven Medicare fee-for-service payment systems, including hospital and physician payments. In its report, MedPAC recommended that Congress increase hospital inpatient and outpatient services by the statutorily required update plus 1% for 2026. The commission also recommended that Congress transition to redistributing disproportionate share hospital and uncompensated care payments as an add-on payment to both inpatient and outpatient payments using the Medicare Safety-Net Index (MSNI) as described in the commission’s March 2023 report and add $4 billion to the MSNI pool [refer to Washington Highlights, Jan. 13, 2023].   

For physicians, MedPAC recommended that for 2026, Congress should replace the existing bifurcated update based on participation in alternative payment models with a single update equal to the Medicare Economic Index minus 1 percentage point. Additionally, like the recommendations for payments for hospital services, there is a second recommendation referencing the commission’s March 2023 report that Congress should establish safety-net add-on payments in the Medicare Physician Fee Schedule for services delivered to low-income Medicare patients.  

The report also included three status report chapters covering ambulatory surgical center services, Medicare Advantage, and the Medicare prescription drug program (Part D). In the report’s final chapter, the commission reviewed eliminating Medicare's coverage limits on stays in freestanding inpatient psychiatric facilities.