At its January meeting, the Medicare Payment Advisory Commission (MedPAC) voted on recommendations for how Medicare provider payments should be adjusted for 2026. This action is then included in MedPAC’s March 2025 Report to Congress on payment adequacy.

The commission overwhelmingly approved recommendations to Congress to reduce Medicare base payment rates of 3% for skilled nursing facilities (SNFs), 7% for home health agencies, and 2.9%  for hospice providers. This is based upon their analysis of four factors: beneficiary access to the service, quality of care, access to capital and each provider’s Medicare fee-for-service (FFS) margin.  In each case, their assessment was that each of these factors was either positive or mostly positive and that they don’t expect the proposed rate reductions to impact beneficiary access to care, as Medicare FFS is a preferred payer of these providers.

Members should keep in mind that MedPAC is charged with making annual recommendations to Congress on Medicare payments to providers but this does not mean that their recommendations become law. Congress or CMS must take action to affect these recommendations, which rarely happens. In addition, commissioners recognize that Medicare FFS subsidizes more than just Medicaid but that these considerations are beyond their purview.

Overall, the meeting was mainly perfunctory as the commissioners discussed the meat of the payment adequacy issues at the December 2024 meeting. Some commissioners reiterated their concerns that they don’t fully understand Medicare Advantage plans’ impacts on provider payment adequacy and beneficiary access, as they only have anecdotal information about the barriers and burden that prior authorizations are posing, and regarding what plans are paying providers. Another commissioner, Brian Fuller, said he believes the commission not only needs to consider current factors for payment adequacy but also would benefit from commission staff quantifying the cost of rules and conditions of participation with which these post-acute care providers need to comply.  This would be a move LeadingAge would support, as financial viability is determined not only by revenue but how it relates to a provider’s costs, and regulatory compliance isn’t a discretionary cost.