Insights

On April 9 and 10, the Medicare Payment Advisory Commission (MedPAC) met for their April meeting, the last meeting in the 2026 Cycle. Commissioners discussed several topics including, how to improve payment incentives, the impact of Medicare Advantage (MA) on hospitals’ and post-acute care (PAC) providers’ finances, and institutional special needs plans (I-SNPs). Commissioners all expressed concerns with the current system and voiced numerous solutions.

IMPROVING PAYMENT INCENTIVES IN MEDICARE

MedPAC staff began this session discussing the drivers of Medicare’s spending growth, payment incentives within fee-for-service (FFS), alternative payment models (APMs) and MA, as well as recommendations to improve Medicare’s incentives. These recommendations can be viewed on slides 29-38 in the Improving Payment Incentives” slideshow found here. MedPAC staff shared that its presentation, along with the Commissioners’ discussion, will be included in the MedPAC June 2026 report to Congress.

Overall, Commissioners agreed on the shortcomings of FFS, APMs, and MA, saying that they each have their strengths and weaknesses when it comes to payment incentives. Commissioners expressed that FFS is foundational, in that it serves as a guardrail to ensure MA provides a variety of services, yet it leads to high inflation. Commissioners shared that APMs are an incentive layered on top of FFS and have tools to avoid unnecessary plan expenses but do not have sufficient funding to support the infrastructure needed. In terms of MA, a few Commissioners said that it is effective at controlling costs, but the incentive is currently centered around coding care rather than quality of care. Commissioners concluded that each of these services play a core role and are vital but agreed that there needs to be stronger tools to provide better incentives to providers.

Additionally, Commissioners emphasized the need to ensure beneficiaries know they are being enrolled in Medicare, MA, or APMs so they can best understand the benefits available to them. There was also concern regarding the rise of costs as people age and are diagnosed with additional chronic illnesses. Commissioners recommended payment mechanisms that encourage specialist-led services with more focus on patients and increased specialist engagement with APMs to combat the rising costs. A few Commissioners mentioned rising drug costs and expressed concern over the focus on price and quantity impacts, rather than innovation impacts. A few Commissioners noted that there are tools in place to manage every cost except for drug costs and recommended the utilization component as an incentive to control when drugs are used in a managed environment.

MA ENROLLMENT AND HOSPITALS’ AND POST-ACUTE CARE (PAC) PROVIDERS’ FINANCES

MedPAC staff began this session giving a brief background on MA enrollment and plan incentives, then discussed how MA enrollment affects hospital finances and PAC providers’ finances. The staff explained the elements of the study they conducted as there was no pre-existing literature that included all of the information they needed. Their research showed that there is no significant association between MA penetration and hospitals’ and PAC providers’ finances, despite complaints that providers are experiencing difficulties navigating the space. This chapter will be included in the June 2026 Report to Congress.

A number of Commissioners voiced concerns on the subjectivity of what is medically necessary, specifically in terms of referrals and denials. One Commissioner detailed that providers have different resources they use to evaluate medical necessity than health plans do, which contributes to different decisions. One Commissioner explained that an MA plan can decide a procedure is not necessary if it’s nonemergent, which leads to increased time-to-placement, which increases costs. While the overturn rate of these denials is very high, providers then lose money and time appealing the decision. Other Commissioners echoed concerns about this. One Commissioner questioned if the reason data is not reflecting the issue is due to the way providers and hospitals have adjusted to MA market penetration in order to combat the rising costs.

Commissioners also spent time discussing heterogeneity between MA plans, and between home health agencies (HHAs), skilled nursing facilities (SNFs), and inpatient rehabilitation facilities (IRFs). Commissioners explored how MA plans vary in how they approach situations depending on the geography and relationships with providers in the areas they are operating in. Commissioners noted that each facility varies in size, coverage, and care level and that these differences impact the solutions they need. For example, one commissioner detailed that smaller SNFs operate better than larger SNFs, while smaller HHAs are not as effective as larger HHAs. Commissioners continuously raised this concern and there was agreement about the need to look into the structural failures currently in place that are either positively or negatively impacting each player.

INSTITUTIONAL SPECIAL NEEDS PLANS (I-SNPS): PROVISION OF SERVICES, NETWORK-ADEQUACY REQUIREMENTS, AND STAR RATINGS

MedPAC staff began this session reviewing their work last year on I-SNPs. Staff also emphasized that this work will not be included in the June 2026 Report to Congress, but if there were commissioner interest, they would conduct additional work in the next cycle and include this as a chapter in the June 2027 Report.

A number of Commissioners voiced concerns about the interaction between Medicare and Medicaid plans within I-SNPs as it is the only model that can apply to long-stay older adults on Medicaid that are getting care in nursing homes from Medicare. One Commissioner specifically raised the issue of conflicting incentives in terms of nursing homes electing to send patients to the hospital due to higher reimbursement rates from Medicare versus I-SNPs focus on keeping care within the nursing home. Additionally, Commissioners expressed the need to better understand what nurse practitioners are doing and how they interact with the rest of the nursing home staff.

Other Commissioners also asked questions regarding the functionality of I-SNPs and the data collected on them. One Commissioner asked if there was a way to identify incident to billing in nurse practitioner visits, to which the staff explained that they are salaried employees, so it is unclear if they are cataloging every visit. Another Commissioner asked why insurer sponsored I-SNPs are getting higher star ratings over those that are provider sponsored. Staff explained that insurer sponsored I-SNPs are simply larger, so they have more enrollees and therefore get more data. Additionally, one Commissioner proposed having CMS require SNP beneficiaries, or their proxy, be educated about the choice of FFS, MA, or I-SNP coverage within the nursing home.

Today’s sessions concluded with a public comment period. Shannan Wu, the Director of Payment Policy at the American Hospital Association urged MedPAC to continue carefully examining the role MA plays in access to care and spending. Wu explained that the major high-cost drivers in Medicare can be found in MA, despite the greater administrative burdens, and believes the Commission should look towards combatting that.

On April 9 and 10, 2026, the Medicaid and CHIP Payment and Access Commission (MACPAC) met for their April meeting. The Commissioners held sessions on implementing community engagement requirements in Medicaid and on Medicaid program integrity. Commissioners also voted in favor of 2 recommendations related to Medicaid managed care to be included in the June 2026 report to Congress.

IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS IN MEDICAID

MACPAC staff began the session by providing an overview of the previous research completed on the community engagement requirements, including expert panel and stakeholder interviews that were conducted in the summer of 2025. Staff then presented the draft recommendation that will be voted on during the May 2026 meeting, for inclusion in the June 2026 report to Congress. The draft recommendation reads: “The Secretary of the US Department of Health and Human Services should direct the Centers for Medicare & Medicaid Services (CMS) to develop a transparent plan for monitoring and evaluating community engagement requirements in Medicaid that provides insight into how such policies affect eligibility and enrollment, health status, employment, state and federal administrative spending, and the attainment of other identified policy goals. CMS should identify new metrics for state reporting, as needed, and build upon existing data collection activities to minimize administrative burden. Additionally, CMS should ensure timely publication of monitoring and evaluation results to inform policy and operational decision making.”

Commissioners appreciated the content and tone of the draft chapter, noting that the topic requires considerable detail. In general, the Commissioners indicated support for the draft recommendation but had some concerns about implementation. For example, Commissioners raised concerns about the additional administrative burden that could be placed on states due to monitoring and evaluation requirements. Commissioners commented that state Medicaid agencies lack the ability to track health insurance enrollment and health status once a beneficiary leaves the program. Commissioners did note that it is easier to track the health and insurance status of beneficiaries who continually enter and exit the program because data such as their use of preventive care, emergency department care, and health insurance coverage is often available from the time they were not enrolled in Medicaid. Overall, Commissioners felt it was important for the recommendation to be realistic about what data can be captured and not recommend beyond what is possible.

Many Commissioners also felt it would be important to evaluate the cost-effectiveness of community engagement requirement implementation, specifically understanding how much states are spending versus saving. Commissioners highlighted costs associated with the accelerated implementation timeline and the likely increase in uncompensated care, especially in rural communities that serve a higher percentage of Medicaid beneficiaries.

Commissioners also discussed a few other topics. One Commissioner highlighted the need to track the reason an individual becomes disenrolled after the work requirements are implemented, especially to understand if it is an administrative error and the individual is still eligible. Another Commissioner questioned whether there were platforms that could evaluate participation in nontraditional employment, such as gig work, as Equifax, one of the highlighted platforms, does not have that capability. MACPAC staff shared that beneficiaries could use an income verification service but that they are not currently aware of additional platforms to recommend. Commissioners and MACPAC staff agreed that new platforms may have become available since data was collected, and so additional research would be beneficial. Lastly, a Commissioner requested that staff include more literature on the effects of increased administrative burden on patients, specifically how it leads to higher rates of health insurance disenrollment. MACPAC staff agreed that including literature about the topic could be beneficial and said they would review possible inclusions.

INTRODUCTION TO MEDICAID PROGRAM INTEGRITY

This session began with MACPAC staff providing an overview of program integrity and fraud, waste, and abuse within Medicaid. Staff then discussed the roles and responsibility of federal and state departments in program integrity and outlined the current issues in Medicaid program integrity. Key takeaways from the presentation included:

• Known fraud, waste, and abuse accounts for a small portion of program spending and its scale and impact are difficult to measure.

• Federal government, states, and health plans have a significant number of statutory and regulatory program integrity responsibilities.

• Key issues in program integrity include federal-state collaboration and program integrity in managed care.

Staff requested that the Commissioners provide feedback on the policy scan findings and further areas for exploration during stakeholder interviews.

Commissioners widely praised the material presented and appreciated the clear definitions and examples of fraud, waste, and abuse. Multiple Commissioners expressed the view that often the terms are inaccurately used, pointing out that disagreeing with a policy or statute does not constitute fraudulent or wasteful spending.

Commissioners had a wide variety of topics of interest for further exploration. A few Commissioners were interested in understanding how CMS and states decide where to invest money and time to best prevent program integrity issues and recover improper payments. One Commissioner specifically requested a return on investment analysis to understand where to invest to produce the best results. There was also widespread interest in understanding best practices for preventing fraud, recovering payments, and working with state Medicaid agencies.

Some other areas of interest included measuring the quality of State Medicaid Fraud Control Units, understanding how prior authorization is useful for program integrity, the impact of delays in convictions during fraud investigations for states, and ways to improve collaboration between CMS and states.

VOTE ON RECOMMENDATIONS FOR JUNE REPORT TO CONGRESS

Commissioners voted on 2 recommendations related to ensuring accountability of Medicaid managed care plans for inclusion in the June 2026 report to Congress.

The first recommendation reads, “The Secretary of the US Department of Health and Human Services should direct the Centers for Medicare and Medicaid Services to provide guidance on the types of accountability actions, such as liquidated damages, informal interventions, and other accountability actions, taken in response to plan noncompliance, in the sanctions section of the Managed Care Program Annual Report pursuant to 42 CFR 438.66(e)(2)(viii).” This recommendation passed by a vote of 17 to 0.

The second recommendation reads, “The Secretary of the US Department of Health and Human Services should direct the Centers for Medicare and Medicaid Services to develop a publicly available database on managed care plan performance that links federally mandated reported data together to facilitate analysis. CMS should also issue guidance and toolkits to help states effectively use these data to assess past performance, improve beneficiary experience, and oversee managed care plans.” This recommendation passed by a vote of 17 to 0.

There was no discussion about either of the recommendations.