MedPAC March Report to Congress – New Estimate on Costs of Medicare Advantage vs FFS & More Pay for Docs

Last Thursday, the Medicare Payment Advisory Commission (MedPAC) submitted its annual March Report to Congress. The Congressional advisory panel has long been critical of the Medicare Advantage (MA) program, but in this report it finds that the federal government will pay 14% more than if the 35 million beneficiaries enrolled in the program were enrolled in fee-for-service (FFS) traditional Medicare.

According to the March report, the Medicare program will pay $615 billion to Medicare Advantage (MA) plans, $76 billion more than it would have on coverage through traditional Medicare. Modern Healthcare explains that in 2024, the Centers for Medicare and Medicaid Services (CMS) implemented a new standard to curb runaway MA spending, called V28, which ended a number of frequently misused CPT codes. This standard has decreased the difference between MA and FFS spending; last year, the government paid an estimated 20% more for MA enrollees.

Medicare Advantage lobby groups, Better Medicare Alliance (BMA) and the Healthcare Leadership Council have long criticized the MedPAC reports for being unfair to MA and have called for MedPAC to be defunded. STAT reports that ahead of the report, BMA sent out a memo stating that MedPAC’s estimates “do not accurately reflect Medicare Advantage spending.” But MedPAC Executive Director Paul Masi notes that MA plans “have never been paid less” than the traditional Medicare program.

The commission remains focused on providing independent and objective analysis to support Congress as it works to improve Medicare for Medicare beneficiaries and taxpayers, and that remains our focus.

The commission also recommended that FFS physician payments should be increased 1.25% for providers in alternative payment models (APMs) and 0.75% for other physicians. According to MedPage Today, the report goes on to say that because a temporary 2.5% pay bump will expire in 2026, they expect 2027 payment rates to decline by 1.2% and 1.7%, respectively.

In the commission’s view, this recommendation for 2027 strikes an appropriate balance between the need to provide adequate payments to clinicians and the need to limit growth in beneficiaries’ cost sharing and premiums and maintain financial pressure on clinicians to constrain their costs.