To start the new year, MedPAC voted on its annual payment recommendationswhich will be included in the Commission’s March Report to Congress. Notably, MedPAC recommended that Congress increase the Medicare payment rates for Medicare Parts A and B by 1.5% for 2025 and emphasized its prior suggestion that Congress allocate an extra $4 billion to safety net hospitals through adopting the Medicare safety-net index policy (an index used to identify safety-net hospitals). 

MedPAC is a non-partisan agency of Congress that advises Congress on Medicare payment policy. Its recommendations are influential but are non-binding, meaning Congress does not need to act on the Commission’s recommendations. 

For the 2025 Medicare payment adjustments, MedPAC will recommend modifying payments for physicians and other health professional services by incorporating half of the Medicare Economic Index (MEI) increase. Additionally, a non-budget-neutral additional payment under the physician fee schedule is recommended for services provided to low-income Medicare beneficiaries. MedPAC reviews of physician payments have found that MEI has outpaced updates to the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) by over 20% since 2010. While legislation already exists to provide a full MEI adjustment to the CF, such a policy would cost hundreds of billions of dollars and therefore has little chance of passing Congress unless the cost can be offset. 

Furthermore, a 7% reduction in payment rates for home health agencies, a 3% reduction for skilled nursing facilities, and a 5% reduction for inpatient rehabilitation facilities are proposed for the year 2025. 

These additional reimbursements are largely influenced by MedPAC’s belief that updates to the Conversion Factor have not kept pace with inflation, as indicated by the Medicare Economic Index (MEI). 

ADVOCATE will share additional information with clients and friends as it becomes available on this and other Federal Health Policies.   


Kirk Reinitz, President