On March 6, 2025, the Medicare Payment Advisory Commission (MedPAC) met to discuss work for their June 2025 report and beyond. The June report contains recommendations and research on the future of Medicare and is usually filled with new ideas and innovations.
PHYSICIAN PAYMENT FORMULA
The first session of the day focused on reforming updates to and ensuring accuracy of the Medicare physician fee schedule. Staff reviewed previous recommendations that the fee schedule should be updated by MEI minus 1% and discussed the limitations of this approach. They also outlined how the payment system updates are diverging between those physicians participating in quality payment models and those who are not. Notably, those in advanced alternative payment models (A-APMs) will recieve progressively higher update over time as compared to those not in A-APMs.
Commissioners then discussed a draft recommendation for creating a new physician update formula based on “portion” of MEI. However, while Commissioners liked the draft recommendation, they were very concerned that the recommendation did not include a minimum or maximum limit on the amount of the payment update.
They stated that MEI can be volatile, especially in the economy right now, and that they would want some boundaries on the update.
Commissioners then discussed improving the accuracy of physician payment rates. Physician relative value units (RVUs) are used as weights to determine overall Medicare payments for a physician service. Staff went through analysis showing how those codes have become misvalued over time. Staff also discussed that RVUs are calculated through work done by the American Medical Association’s RVS Update Committee (RUC), but that work could lead to some inaccuracies. Staff pointed out that MedPAC has twice recommended that CMS should have a panel to review recommendations from the RUC on physician RVUs.
Staff then presented three examples of potential areas of inaccuracy in RVUs, focusing on the outdated MEI used to update RVUs; the need to update global surgical codes to truly address care practices; and inaccuracy in practice expense (PE) RVUs. In the PE RVUs, staff showed that a significant number of physicians no longer have offices outside of the hospital so indirect PE payments might need to be suspended for these types of physicians.
The draft recommendation said that, “Congress should direct the HHS secretary to improve the accuracy of relative payment rates for clinician services by updated costs data regularly, and ensuring the methodology used to determine payment rates for different services reflects the settings in which clinicians practice medicine.” While Commissioners supported this recommendation, they were concerned that it was too vague and did not focus on specific problems with the global surgical bundle and indirect PE.
These recommendations will be reworked based on Commissioner feedback and brought back for a vote in the April meeting. This will be a chapter in MedPAC’s June Report to Congress.
REDUCING BENEFICIARY COST SHARING FOR OUTPATIENT SERVICES AT CRITICAL ACCESS HOSPITALS (CAHS)
In the second session, staff reviewed work from the September 2024 and January 2025 meetings on this subject, highlighting the disproportionate share of costs beneficiaries bear if they go to CAHs for outpatient services. Staff updated their analysis showing that over half of CAHs FFS Medicare total outpatient payments are from beneficiary copayments.
Staff proposed a final recommendation stating, “For Medicare HHS beneficiaries, the Congress should:
- Set coinsurance for outpatient services at critical access hospitals equal to 20 percent of the payment amount for services that require cost sharing; and
- Place a cap on critical access hospital outpatient coinsurance equal to the inpatient deductible.”
Discussion was minimal as this was the third time Commissioners had seen the data and had seen the draft recommendation in January 2025. The recommendation passed unanimously on a 17-0 vote.
MEDICARE INSURANCE AGENTS
In the third session of the day, Commissioners heard findings from preliminary work being done on insurance agents/brokers for Medicare Advantage and Medigap plans. Staff outlined their findings on how beneficiaries enroll in Medicare, how agents market to beneficiaries, how agents are compensated, and outlines from concerns regarding agent practices and staff data limitations in this area.
Staff also reviewed the methods for marketing to beneficiaries, from referrals to purchasing lead lists to contracting with marketing organizations to create lead generation. Staff also outlined that agents are not required to present all plan choices to beneficiaries and reviewed agent compensation based on beneficiary enrollment. While CMS has safeguards in place like ceilings like the fair market value and lower compensation levels set for reenrollment, it was still found that agents have a financial incentive to enroll beneficiaries in MAPD plans over stand-alone PDP plans, and higher-premium Medigap plans vs. lower premium.
Staff then outlined next steps on analytics for the future including focus groups, interviews with SHIP counselors, data analytics, and review of the Medicare Plan Finder website. Commissioner Brian Miller expressed frustration with the tone of the discussion, stating that beneficiaries are smart and do not need help enrolling in Medicare. Commissioner Gina Upchurch summarized most other Commissioner’s opinions well – saying that everyone created a Medicare system that was way too complex, so enrolling in Medicare is harder for beneficiaries than enrolling in any employer group health plan. Commissioners also stressed the need for more transparency in the plan data, broker compensation, and choices for beneficiaries. Commissioners all said they loved these initial findings and were excited to continue the work.
Staff said this is their first foray in this area, and that this work would continue into the 2025-2026 cycle next year.
PRELIMINARY WORK ON MEDIGAP
In the fourth session, staff reviewed initial work on Medigap plans. Medigap plans are supplemental insurance plans that wrap around traditional Medicare FFS and provide out-of-pocket protection for beneficiaries. Beneficiaries have many avenues of supplemental coverage from Medigap to Medicare Advantage or employer-sponsored insurance.
Staff then reviewed the characteristics of Medigap enrollees, their geography dispersion, plan types, enrollment, premiums, and consumer protection. They also presented a breakdown of Medigap premium variation across states. Staff then outlined future work on beneficiary focus groups, market trends and the role of state guaranteed-issue policies on the Medigap market.
Commissioners had a lot of questions about Medigap – asking why there are no enrollment files, why is there such variation in pricing, why do we have no consumer data, etc. Chairman Michael Chernew summarized everything by saying that the Commission needed to look further into benefit design, price variation, consumer choice, and MA competition.
PAYMENT FOR GROUND AMBULANCE SERVICES
In the last session of the day, staff reported out preliminary findings on a Congressionally mandated report on ground ambulances. The Congressional mandate requires that MedPAC look at:
- Ground Ambulance Data Collection System (GADCS) data
- Analyze the burden on ambulance organizations from this data collection
- Provider recommendations to determine whether ambulance organizations should continue to have to submit this data.
Staff provided background on the Medicare ambulance fee schedule (AFS), payment for mileage, payments for services, the GADCS. Staff also provided a preliminary read out of the data within the GADCS. Staff also broke out the cost per response based on ownership and service area location.
Staff then broke down their future workplan and asked for Commissioner input.
Commissioners discussed the cost difference between rural and urban, with Commissioner Lynn Barr saying she was struck by the cost difference, especially considering that rural response is so much more expensive but it is only paid about 1% more than urban. Commissioners asked for additional analysis based on ownership, what happens for those responses that do not require transport, and responder proportion between BLS (Basic life support), ALS (Advanced Life Support), and ACLS (Advanced Cardiac Life Support).
Staff will be digging into these and other questions in the 2025-2026 MedPAC work cycle.