MEDPAC issues report to Congress on Medicare payment policies

The Medicare Payment Advisory Commission (MEDPAC) recently released its annual June report to Congress, highlighting issues across the Medicare program that affect payment policies and care delivery. MEDPAC publishes two reports each year: One in March that offers detailed recommendations for Medicare payment updates for the coming year, and another in June that examines broader issues and potential program reform.

One of the report’s key chapters focuses on improving payment incentives. Medicare uses three payment approaches for healthcare services: traditional fee-for-service (FFS) Medicare, alternative payment models (APM), and Medicare Advantage (MA). These approaches all have underlying financial incentives that influence provider behavior, Medicare spending, and the overall value of the program, according to MEDPAC.

“FFS Medicare gives providers an incentive to increase the volume and intensity of services they provide; APMs encourage efficiency, but their success has been modest and contingent on their design; and MA has strong cost-management incentives but currently costs Medicare more than what would have been incurred in FFS, stemming largely from issues with risk adjustment,” states the report.

While MEDPAC outlined various ways to improve incentives for FFS Medicare, APMs, and MA, it emphasized the need for accurate FFS rates, as they serve as the basis for other Medicare payment systems.

The June 2026 report also examines Medicare payment operations and their role in identifying and preventing improper payments. In its financial report for fiscal year 2025, HHS identified an estimated $56.7 billion in Medicare improper payments, including $28.8 billion from FFS Medicare, $23.7 billion from MA, and $4.2 billion from Part D. MEDPAC examined CMS’ current tools, systems, and contractor activities designed to reduce improper payments across these plans, highlighting areas for improvement.

Other topics covered in the report include the following:

• The complexity of Medicare payment enrollment decisions for beneficiaries
• The relationship between MA enrollment and the financial performance of hospitals and post-acute providers
• Access to hospice and certain complex palliative services for beneficiaries with end-stage renal disease or cancer
• The Medicare Ground Ambulance Data Collection System

Although the June report does not include the explicit payment update recommendations in its March counterpart, it provides valuable insights into MEDPAC’s focus areas. The report aligns with CMS’ long-term goals of advancing value-based care and expanding site-neutral payments. Revenue integrity professionals should read the report to better understand topics that Congress and federal agencies are being advised on ahead of future rulemaking and potential policy changes.