The Medicare Payment Advisory Commission (MedPAC) is required by law to annually review Medicare payment policies and make recommendations to the Congress.

In its March 2020 report to the Congress, MedPAC makes payment policy recommendations for provider sectors in fee-for-service (FFS).

Fee-For-Service Payment Update Recommendations

To meet its legislative mandate, the principal focus of the March report is MedPAC’s recommendations for annual payment rate adjustments (or “updates”) under Medicare’s various FFS payment systems. MedPAC assesses payment adequacy by examining beneficiary access to care (supply of providers, service use, and access surveys); quality of care; providers’ access to capital; and provider costs and Medicare payments, where available.

MedPAC’s recommendations for the 2021 payment year are listed below. The Congress should:

Hospitals: Inpatient and outpatient services

  • For fiscal year 2021, update the fiscal year 2020 Medicare base payment rates for acute care hospitals by 2 percent; and
  • Provide hospitals with an amount equal to the difference between the update recommendation and the amount specified in current law through the Commission’s recommended hospital value incentive program (HVIP).

Physicians and other health professional services

  • For calendar year 2021, the Congress should update the calendar year 2020 Medicare payment rates for physician and other health professional services by the amount determined under current law.

Ambulatory surgical center services

  • The Secretary should require ambulatory surgical centers to report cost data.
  • For calendar year 2021, in the absence of cost report data, the Congress should eliminate the update to the calendar year 2020 Medicare conversion factor for ambulatory surgical centers.

Outpatient dialysis services

  • For calendar year 2021, the Congress should update the calendar year 2020 Medicare end-stage renal disease prospective payment system base rate by the amount determined under current law.

Skilled nursing facility services

  • For fiscal year 2021, the Congress should eliminate the update to the fiscal year 2020 Medicare base payment rates for skilled nursing facilities.

Home health agency services

  • For calendar year 2021, the Congress should reduce the calendar year 2020 Medicare base payment rate for home health agencies by 7 percent.

Inpatient rehabilitation facility services

  • For fiscal year 2021, the Congress should reduce the fiscal year 2020 Medicare base payment rate for inpatient rehabilitation facilities by 5 percent.

Long-term care hospital services

  • For fiscal year 2021, the Secretary should increase the fiscal year 2020 Medicare base payment rates for long-term care hospitals by 2 percent.

Hospice services

  • The Congress should:
  • For fiscal year 2021, eliminate the update to the fiscal year 2020 Medicare base payment rates for hospice and
  • Wage adjust and reduce the hospice aggregate cap by 20 percent


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