Medicare Payment Advisory Commission Report Submitted to Congress

November 18, 2025 / 7 min read

In two recent articles, the author summarized the 2025 Social Security Administration Annual Report and the 2025 Medicare Annual Report. Following up on those articles, this article discusses the recently released 2025 Medicare Payment Advisory Commission (“MedPAC”) Report to Congress, titled “Medicare and the Health Care Delivery System.”^[1]

By way of background, MedPAC is an independent congressional agency which advises the U.S. Congress on issues affecting the Medicare program.^[2]Twice each year, MedPAC issues reports to Congress with recommendations based on staff research, comments from interested parties, and meetings with numerous stakeholders, including congressional committee staff, Centers for Medicare & Medicaid Services (CMS) staff, health care researchers, health care providers, and beneficiary advocates.^[3]

MedPAC’s report is divided into seven topical chapters. The below provides a very general overview of key points outlined in each chapter of MedPac’s report as follows:

Reforming physician fee schedule updates and improving the accuracy of relative payment rates

As part of its review, each year MedPAC reviews the adequacy of fee-for-services (FFS) payments made under the Medicare physician fee schedule (PFS) and makes recommendations regarding appropriate updates.^[4]Regarding Medicare beneficiaries’ access to clinician care, MedPAC found that access has historically been as good, or better than, that of privately insured individuals; however, MedPAC expressed concern regarding whether future payment rate updates will allow consistent access to care in the future.^[5]The report predicts that future growth in clinician costs is projected to outpace the growth in PFS rates, which may cause clinicians to either reduce the number of Medicare beneficiaries they treat, cease participation in Medicare, or consolidate with hospitals, resulting in increased spending for Medicare beneficiaries and the Medicare program.^[6]

Based on this, MedPAC members make two recommendations. First, MedPAC recommends that Congress should replace the current-law updates to the PFS with an annual update based on a portion of the growth in the Medicare Economic Index (MEI).^[7]Second, MedPAC recommends that Congress should direct the Secretary of Health and Human Services to improve the accuracy of Medicare’s relative payment rates for clinician services by collecting and using timely data that reflects the costs of delivering care.^[8]

Supplemental benefits in Medicare advantage

In this chapter, MedPAC discusses information regarding supplemental benefits involving Medicare Advantage (MA) plans. Briefly, in addition to providing coverage for services under Medicare Parts A and B, MA plans may provide “supplemental” benefits to their enrollees, including reduced cost sharing for Part A and B services, reduced Part B and Part D Prescription Drug Plan premiums, enhanced Part D benefits, and other benefits not covered under Part A and B such as dental, vision, or hearing benefits.^[9]The report notes that these benefits are a defining feature of MA plans, but there is limited information about the use of these benefits or their costs.^[10]

According to MedPAC’s report, CMS and Congress have provided MA plans with increased flexibility in the type of supplemental benefits that can be offered, and different types of MA plans offer different types of supplemental benefits.^[11]The report indicates that, given the increase in the use of supplemental benefits, it is valuable to understand how these benefits are being used, but there is a lack of sufficient data for a full analysis.^[12]While the report does not contain a formal recommendation on this point, MedPAC notes that better information on supplemental benefits could help both beneficiaries, in navigating their available options, and policy makers, in identifying ways of making this program more efficient.^[13]

Examining home health care use among Medicare advantage enrollees

This chapter analyzes the utilization of home health care by MA enrollees, specifically how home health care use varies by beneficiary, plan, and provider characteristics.^[14] The report uses several sources of combined data to estimate the probability of home health care use among FFS and MA beneficiaries, as well as the number of visits per beneficiary.^[15] The report found that the overall rate of home health use was slightly lower among MA enrollees (8.3%) than among FFS beneficiaries (8.6%) and that MA enrollees also had fewer home healthcare visits per year (18.2 vs 20.4) than FFS beneficiaries.^[16]MedPAC does not include any recommendations on this matter and indicates that in future reports it intends to explore MA enrollees’ use of other post-acute care providers, including skilled nursing facilities and inpatient rehabilitation facilities.^[17]

Part D prescription drug plans for beneficiaries in fee-for-service Medicare and Medicare advantage

MedPAC’s report provides an analysis of Part D Prescription Drug Plans, which can either be offered as standalone prescription drug plans (PDP) for Medicare beneficiaries enrolled in FFS Medicare, or as part of a Medicare Advantage Prescription Drug plan (MA-PD).^[18] The report notes that the Part D plan market has evolved with important impacts on plan choice, beneficiary cost, and access to medications.^[19]The report indicates that while there has been a general shift towards MA-PDs, which typically offer lower costs, PDPs play an important role in offering prescription coverage for FFS enrollees, especially those with low income and limited assets.^[20]

In addition to the above, the report raises several concerns about the stability of the PDP market including increasing premiums and drug costs and a declining number of plans.^[21]The report warns that with a divergence of the costs to insurers between MA-PDs and PDPs, the PDP market may become less appealing to insurers.^[22]The report concludes this chapter by highlighting that PDPs are the only options available to Medicare beneficiaries enrolled in FFS Medicare, thus MedPAC will continue to review the drivers of cost differences between MA-PDs and PDPs.^[23]

Medicare beneficiaries in nursing homes

In this chapter, the report discusses the 1.2 million Medicare beneficiaries living in nursing homes, a group which is older and has higher medical costs than other Medicare beneficiaries.^[24]The report notes that more than 80% of Medicare beneficiaries living in a nursing home are also covered by Medicaid, which predominantly pays for nursing home care, with Medicare’s coverage largely limited to short-term skilled care and other medical services received by beneficiaries living in nursing homes.^[25]

The report identifies the quality of care for nursing home residents as a long-standing and well documented problem.^[26]On this point, the report notes that CMS has made attempts to encourage improvements in quality of care, including by publicly reporting a star rating for each nursing home, with payment rates raised or lowered due to star rating.^[27]The report also notes that specialized MA plans called institutional special needs plans (I-SNPs) have been created to try and reduce the use of expensive inpatient care for nursing home patients.^[28]The report notes MedPAC may consider studying alternative designs to the star rating system to better calculate overall nursing home ratings and potential policy changes to encourage the broader use of I-SNPs.^[29]

Medicare’s measurement of rural provider quality

MedPAC’s report notes Medicare’s focus on measurements of quality of care and the unique challenges in measuring quality of care in rural health care settings, specifically low patient volume, as well as limited staff and funds available for quality-improvement activities.^[30]The report continues that MedPAC’s March 2025 report expanded their reporting of provider quality to include comparisons of rural and urban areas, finding that the comparisons were mixed.^[31]The chapter concludes with MedPAC’s stated intent to continue to monitor the implementation and effectiveness of initiatives to improve quality measurement of rural providers.^[32]

Reducing beneficiary cost sharing for outpatient services at critical access hospitals

The final chapter in the report deals with cost sharing in critical access hospitals (CAHs), small rural hospitals with 25 or fewer acute care beds.^[33]CAHs receive cost-based reimbursement for most of their case, rather than the prospective payment system rates paid to other hospitals, which the report notes avoid significant losses for CAHs.^[34]The report notes, however, FFS Medicare beneficiaries pay substantially more coinsurance at CAHs than they would at other hospitals, up to 20% of hospital charges.^[35]

To attempt to mitigate costs for FFS beneficiaries, MedPAC recommends coinsurance for outpatient services be set at 20% of the outpatient payment amount, rather than 20% of charges, and subject to a cap per service equal to the Medicare inpatient deductible.^[36]The report notes that, had this measure been in place, beneficiary cost-sharing liability would have been reduced by approximately $2.1 billion in 2022.^[37]This payment reduction would have necessitated a corresponding increase in part B premiums.^[38]

Verisk will continue to monitor updates in this area and will provide updates as warranted.

[1] Medicare Payment Advisory Committee (MedPAC), Medicare and the Health Care Delivery System, June 12, 2025 https://www.medpac.gov/document/june-2025-report-to-the-congress-medicare-and-the-health-care-delivery-system/

[2] Medicare Payment Advisory Committee (MedPAC), Medicare and the Health Care Delivery System, June 12, 2025, https://www.medpac.gov/what-we-do/

[3] Id.

[4] Medicare Payment Advisory Committee (MedPAC), Medicare and the Health Care Delivery System, June 12, 2025, at 3. https://www.medpac.gov/document/june-2025-report-to-the-congress-medicare-and-the-health-care-delivery-system/

[5] Id.

[6] Id, at 4.

[7] Id, at 377.

[8] Id.

[9] Id, at 57.

[10] Id.

[11] Id, at 58.

[12] Id, at 58-61.

[13] Id, at 62.

[14] Id, at 143.

[15] Id, at 140.

[16] Id.

[17] Id, at 143.

[18] Id. at 175.

[19] Id.

[20] Id. at 176.

[21] Id.

[22] Id. at 177.

[23] Id. at 178.

[24] Id. at 227.

[25] Id.

[26]Id.

[27] Id. at 228.

[28] Id.

[29] Id. at 229.

[30] Id. at 301.

[31]Id. at 302.

[32] Id. at 303.

[33] Id. at 341.

[34] Id.

[35] Id.

[36] Id. at 342-343.

[37] Id. at 343.

[38]Id.