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On September 3 and 4, 2026, the Medicare Payment Advisory Commission (MedPAC) met for its first public meeting of the 2026-2027 cycle. During the meeting, Commissioners discussed several topics, including the workplan on ambulatory surgical centers (ASCs) for this cycle, the use of post-acute care (PAC) services by beneficiaries in fee-for-service (FFS) Medicare and Medicare Advantage (MA), and the accuracy of MA risk adjustment at the plan level. MedPAC staff shared that they are planning to discuss all of these topics during the Spring 2027 meetings as well, and that the June 2027 Report to Congress will likely include a chapter on MA risk adjustment at the plan level.
ASC WORKPLAN
The session began with MedPAC staff providing an overview of current knowledge and prior MedPAC work on ASCs, highlighting recent growth in ASC use and changes to the ASC-covered procedures list. Next, staff summarized their proposed workplan analysis, which aims to understand factors associated with geographic differences in ASC supply and assess the impact of ASC growth on FFS surgical volume.
Commissioners had a few clarifying questions. One Commissioner suggested capturing ASC size in both the number of operating rooms and the number of medical specialties practicing, which staff clarified they planned to do. Another Commissioner questioned why MA data will not be included in the analysis. Staff responded that while they hope to incorporate MA data in the future, they are currently unable to do so. Lastly, when asked whether there was a clear relationship in Medicare reimbursement for a procedure performed in an ASC versus a hospital outpatient department (HOPD), staff responded that, generally, ASCs are reimbursed at about 60% of HOPD reimbursement.
Some Commissioners had suggestions on the planned site visits and informational interviews laid out in the workplan. One suggestion was to ask ASC professionals about their plans to start offering additional procedures as they move onto the ASC covered procedures list. Another suggestion was to also interview rural providers about their barriers to starting an ASC.
Commissioners also had comments on additional analyses they would appreciate seeing. Those included analyses on the following:
- Potential decreased waiting time for procedures
- The change in case mix for ASCs and HOPDs
- The quality of procedures being performed in ASCs, more specifically if there is an increase in ER visits or hospital readmittance after a procedure in an ASC
- How ASCs may both increase access to procedures and increase rates of inappropriate care
Overall, Commissioners expressed excitement about the proposed workplan and are interested in understanding how ASCs have changed care delivery. MedPAC plans to revist it the work during its January 2027 public meeting for an interim update.
EXAMINING PAC BY BENEFICIARIES IN FFS MEDICARE AND MA
The session began with MedPAC staff providing a descriptive analysis of PAC use across FFS Medicare and MA in 2023, emphasizing that this is preliminary data and that results adjusted for beneficiary characteristics will be presented in spring 2027. Staff found that MA beneficiaries had slightly fewer Acute-Care Hospital (ACH) and PAC stays, and they were less likely to receive PAC services after hospitalization but typically had longer ACH stays. Staff also found that FFS Medicare beneficiaries were more likely to utilize multiple facilities and have longer stays.
Commissioners had questions and comments about the material presented. One Commissioner asked about other aspects of payment structure. Staff responded that they are currently looking into this and will share more in the spring 2027 meetings. However, staff did say they found that MA plans use a mix of strategies including per-visit and per-stay. Some Commissioners raised questions about what happens to beneficiaries when they are waiting for appeal on payment denials, specifically who is responsible for paying for the care, who is in charge of the care, and is there a window of time for appeals? Staff said they would look into these questions.
Multiple Commissioners discussed site-neutral payments, with differing views on its effectiveness. One Commissioner suggested including site-neutral as a variable in determining how MA plans deviate from FFS and what it would look like to move towards that model. A number of Commissioners raised concerns about this idea, stating that beneficiaries receive various levels of care in each facility and they have different incentives. For example, home-health is inclined to focus on collective health and ensure the beneficiary does not end up in the hospital or a facility; however, other PAC facilities typically focus on restoring functionality and discharging to the home. MedPAC staff expressed appreciation for this conversation but reiterated that they are looking more broadly at utilization of care, not specifically payment policies.
Commissioners also offered the following suggestions for additional analysis by MedPAC staff:
- Stratify data by dual-enrolled and non-dual-enrolled beneficiaries
- Examine the data by conditions to get better view of level of care provided
- Expand on beneficiaries admitted to PAC facilities from their community versus from the hospital
- Look into overall cost and length of care considering hospital stay, specifically if a longer hospital stay leads to shorter or longer PAC facility stay
- Conduct interviews with both hospital discharge planners and beneficiaries who were denied care
ACCURACY OF MA RISK ADJUSTMENT AT THE PLAN LEVEL
MedPAC staff began this session by sharing that the presentation is an expansion on the conversation Commissioners had at their March 2026 meeting, where they discussed their concerns with using FFS data to calibrate the risk model due to MA’s coding pattern and utilization differences. From their analysis, staff found current risk adjustment narrows the distribution of plan bids, indicating risk scores account for some variation. Staff then discussed the challenges with the current system, the policies that could improve accuracy, and plans for future work. They shared that there would be another session focused on risk adjustment in spring 2027, and that a chapter on the topic would likely be included in the June 2027 Report to Congress.
Commissioners had numerous comments on the policies proposed to improve the risk model’s accuracy and on MedPAC’s plans for future work. Commissioners overall agreed that the risk model should reflect MA characteristics to better predict annual spending; however, some voiced concern about the unintended consequences of recalibrating, specifically how plans currently invest excess revenue into supplemental benefits and lower premiums. A number of Commissioners expressed support for starting reforms with combating model input challenges, as they would improve accuracy more quickly. Commissioners encouraged greater use of objective utilization markers that are already available, including inpatient admissions and nursing home stays, to improve accuracy. A number of Commissioners also requested a high-cost risk pool for infrequent outliers to prevent skewed results and better assess their costs and needs. Other Commissioners also raised concerns about the prioritization of transparency and simplicity over accuracy, explaining the need for more complexity to better predict costs and provide better care for beneficiaries. Some Commissioners voiced skepticism about machine learning, at least until data quality issues are resolved, while others believed machine learning could improve the data quality concerns.
PUBLIC COMMENTS
At the conclusion of the session, MedPAC opened the floor for public comment. Shannon Woo, Director of Payment Policy at the American Hospital Association (AHA), flagged that prior authorization and the lack of quality niche providers already limit access to care for beneficiaries.
It’s the beginning of the end of summer recess. House members have made their way back to Washington for one week before they take another short break, as Senators still have another week before returning to town. Meanwhile, the administration is looking to keep its efforts on prescription drug pricing in the news, and the Medicare Payment Advisory Commission (MedPAC) will hold their September meeting. With that, let’s get into it. Welcome to the Week Ahead!
The Administration
New most-favored-nation (MFN) drug pricing deals are likely to be announced on August 31, this time with mid-sized biopharma companies. Reportedly, drugmakers will provide their products to Medicaid programs at MFN prices in exchange for tariff relief and exemptions from Medicare pilot discount programs. The Trump administration will certainly be looking to message these deals as a win in health care affordability to highlight ahead of the midterm elections. However, we expect Democratic members of Congress to combat that messaging by continuing to highlight the need for more details on which to judge the impact of these deals on prescription drug prices.
The Senate
The Senate is still enjoying their recess.
In contrast, Congressional advisory body MedPAC is kicking off their 2026-2027 analytic cycle with their first public meeting on September 3rd and 4th. The upcoming year will focus on numerous topics including recent trends in Medicare Part D spending, Medicare’s quality measurement and value-based payment programs, and Medicare Advantage utilization and satisfaction. As always, MedPAC will also be doing its annual work to consider the adequacy of Medicare’s fee-for-service (FFS) payments and updates.
The House
The House returns to consider a Senate-passed continuing resolution (CR) that would fund the government through December 11, 2026. House Republican leadership has indicated that they are hoping to pass the measure this week to avoid a government shutdown before the elections and will begin consideration as soon as September 1, according to the House Majority Leader’s weekly schedule. While the CR is mostly a continuation of existing federal funding, the Senate version did include a provision that would prevent new guidance from the Office of Management and Budget (OMB) on federal grantmaking from going to effect until December 11.
Health Care Hearing This Week
- September 2: House Veterans’ Affairs Committee hearing on VA electronic health record modernization updates
There You Have It
The summer calm is nearly over but we hope the good memories will linger longer. What has been your favorite summer memory? Let us know. Make it a great week!
On August 4, 2026, the Senate Finance Health Care Subcommittee held a hearing on building a resilient health care future with biotechnology. The hearing centered around protecting and advancing U.S. biotechnology infrastructure, specifically the creation of novel and microbial drugs, to ensure the U.S. remains ahead of China. Members questioned witnesses about reliance on key starting materials, supporting the full ecosystem in which microbial drugs are created, and affordability of the drugs once they make it to market. There was bipartisan concern for ensuring affordability and innovation work together.
OPENING STATEMENTS
- Senate Finance Health Subcommittee Chairman Todd Young (R-IN)
- Senate Finance Health Subcommittee Ranking Member Maggie Hassan (D-NH)
WITNESS TESTIMONY
- Alan Palkowitz, Ph.D., President and CEO, Indiana Biosciences Research Institute (IBRI) – Testimony
- Michelle Rozo, Ph.D., Vice Chair, National Security Commission on Emerging Biotechnology – Testimony
- Vera Luther, MD, MS, Section Chief of Infectious Disease and International Health, Dartmouth Hitchcock Medical Center, Dartmouth Health – Testimony
- Kevin Outterson, JD, LL.M., Austin B. Fletcher Professor of Law, and Executive Director and Principal Investigator of Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator (CARB-X), Boston University – Testimony
MEMBER DISCUSSION
Key Starting Materials
Members voiced concern with the U.S. reliance on China for the key starting materials needed to create antibiotics and microbial drugs. Senators James Lankford (R-OK) and Roger Marshall (R-KS) asked what could be done to bring the full supply chain back to the U.S. or its allies. Dr. Palkowitz explained that the U.S. needs to invest in research to make key starting materials less harmful to the environment and to drive innovation in manufacturing. Dr. Rozo stated that push and pull mechanisms, such as advanced drive innovation in manufacturing. Dr. Rozo stated that push and pull mechanisms, such as advanced market commitments and offtake agreements, can support innovation and help lower drug prices for purchasers. She also recommended funding new ways to make those chemicals through innovative manufacturing. Similarly, Mr. Outterson explained that the government needs to give companies more money to require them to produce their drugs in the U.S. to offset the costs.
Senator Mark Warner (D-VA) asked specifically what kind of investments the private sector is making to reduce dependence on China for key starting materials. Dr. Rozo shared that the biotechnology environment is hard to survive in because it takes too long for companies to see return on investments. She recommended independent investment funds to help reduce risk through strategic patient capital.
Supporting Innovation
Members from both parties spent time discussing how to best support the biotechnology industry as they create new drugs. Subcommittee Ranking Member Hassan (D-NH) asked if targeted tax incentives would help the smaller companies get started. Dr. Palkowitz agreed with her that the biggest challenge is collecting the initial financial backing and supported the tax incentives as long as it is done in scale to support the whole production pipeline. Senator Hassan then expressed support for recognizing biotechnology as critical infrastructure and asked for input on how this would strengthen national security. Dr. Rozo supported this idea saying it would enable threat information sharing and federal response in a crisis. Senator Bill Cassidy (R-LA) suggested Medicare paying an extra bit of money to the biotech companies so the medications will always be accessible rather than paying when they are needed. Dr. Luther said a subscription model is an excellent point and that this has already been recommended in the PASTEUR Act, which would allow for companies to get paid for the value they provide rather than the volume the drug is consumed. Mr. Outterson further explained that the biotech companies have simply responded to demand for the cheapest option by offshoring, so the government would likely have to pay a small premium to ensure the full supply chain is brought back to the U.S.
Subcommittee Chair Young (R-IN) focused on addressing the funding and research gap between early discovery and clinical trials. Dr. Palkowitz explained that the U.S. needs an ecosystem to work together to ensure science is ready to move forward and can be translated from the science to patient care. Full Committee Ranking Member Ron Wyden (D-OR) specifically asked how to direct resources towards accelerators to avoid the aforementioned research gap. Mr. Outterson stated that public-private partnerships are the way to bring innovations to patients and investments in innovative technology will also move the needle.
National Security Commission for Emerging Biotechnology Report
The National Security Commission for Emerging Biotechnology (NSCEB) released a report in April 2025 outlining a set of recommendations to “both advance our progress and slow that of our strategic adversaries, particularly China, in the race for biotechnology supremacy.” The Commission recommended mobilizing the private sector, attracting private capital, creating public-private partnerships, and investing in the talent pipeline. Subcommittee Chair Young (R-IN), who served as the Chair of the NSCEB, asked exactly which recommendations from the report that China seems to have enacted. Dr. Rozo, who served as Vice Chair of the Commission, explained that they have adopted strategic investments, industrial biomanufacturing and infrastructure to support those investments, and regulatory reform making it easier for products to move through their system. Senator Catherine Cortez-Masto (D-NV) followed up asking what we do in response to China taking our recommendations. Dr. Rozo stated that the Commission laid out an agenda to run faster and simultaneously stop national security concerns, but it is only impactful if it is public so there are risks.
On August 4, 2026, the Senate Budget Committee held a hearing to examine the Medicaid program. There were bipartisan concerns about fraud in Medicaid, with Republicans focused on the impact of Medicaid Fraud Control Units while Democrats highlighted staffing changes with Inspectors General and pardoning of fraudsters. Other topics covered included a discussion about federal match rates for various Medicaid populations, Medicaid eligibility, and the impacts of H.R. 1 on Medicaid.
OPENING STATEMENTS
WITNESS TESTIMONY
- Mr. Brian Blase, PhD, President, Paragon Health Institute – Testimony
- Mr. Johnathan Ingram, JD, Vice President of Policy and Research, Foundation for Government Accountability – Testimony
- Mr. Andy Schneider, JD, Research Professor of the Practice, Center for Children and Families, McCourt School of Public Policy, Georgetown University – Testimony
MEMBER DISCUSSION
Federal Match Rates
Republican Committee members focused their concerns on differences in federal matching for Medicaid populations, specifically highlighting that traditional Medicaid receives an average $1.33 match for every $1 spent, while Medicaid expansion populations receive $9 for every $1 spent. Chairman Johnson and Sen. John Kennedy (R-LA) questioned if the match rates should be equalized. Dr. Blase argued that the match rates between the traditional and expansion populations should be equalized because the difference in rates creates a perverse incentive for states to cheat and overenroll able-bodied Americans to receive increased federal funding. In contrast, Mr., Schneider stated that he does not believe states are cheating in Medicaid administration.
Eligibility
Chairman Johnson asked the panel if they agree with the practice of redetermining Medicaid eligibility. Mr. Schneider stated that redetermining eligibility is important but checking more than once a year can be hard. Ranking Member Jeff Merkley (D-OR) asked Mr. Schneider to expand. Mr. Schneider shared that often there is a lot of fluctuation in income month-to-month for families at the eligibility threshold, and the constant checking increases administrative burden and stress from needing to constantly refile.
Fraud
There was bipartisan agreement in wanting to reduce fraud in Medicaid but differences in proposed solutions. Sen. Rick Scott (R-FL) asked about state Medicaid Fraud Control Units, specifically about the effectiveness of the New York unit. Mr. Ingram shared that, in his opinion, the New York unit was poorly run and, in general, the units are costing more to run then they are recovering in fraudulent payments. Mr. Ingram recommended increasing oversight for Medicaid fraud control units.
Sens. Chris Van Hollen (D-MD) and Patty Murray (D-WA) shared their concerns about fraud in Medicaid. However, they questioned the wisdom of firing of various Inspectors General and the pardoning of Medicaid fraudsters by the Trump administration if the goal is to combat fraud.
Impacts of H.R. 1
Democratic Committee members used the hearing as an opportunity to highlight funding changes to the Medicaid program enacted under H.R. 1, otherwise known as the One Big Beautiful Bill Act. Sen. Tim Kaine (D-VA) shared that 12 hospitals in rural Virginia have announced their closures since July 2025 and have cited H.R. 1 as the reason. He also shared that an additional 12 hospitals are at risk of closure. Sens. Kaine and Ben Ray Lujan (D-NM) expressed the view that H.R. 1 has just shifted Medicaid spending to states that do not have the funds to increase state taxes to make up for the increased costs. Dr. Blase stated that the shift is a complicated problem. Sens. Sheldon Whitehouse (D-RI) and Ron Wyden (D-OR) expressed that Medicaid work requirements reporting will greatly increase administrative burden and cause complications for beneficiaries.
