MedPAC Reviews Key Medicare Trends and MA Payment Accuracy

The Medicare Payment Advisory Commission (MedPAC) at its September meeting reviewed recent trends in Medicare spending, beneficiary affordability, provider consolidation and Medicare Advantage (MA) payment accuracy. MedPAC staff gave presentations as a backdrop for the commission’s work leading up to next year’s Report to Congress. MedPAC is a non-partisan, independent legislative branch commission created to advise Congress about Medicare-related issues.

According to MedPAC staff, national health spending rose about 7% annually in 2023 and 2024, while Medicare spending increased 9% and 8%, respectively. Spending is shifting toward outpatient and clinician services, and Part D costs are rising because of the Inflation Reduction Act and greater use of high-cost drugs.

Beneficiaries report better overall health, but affordability remains a concern. Traditional Medicare fee-for-service beneficiaries without supplemental coverage paid more than $5,400 in premiums and cost sharing, while 25% of partial-benefit dual-eligible beneficiaries struggled to pay a medical bill.

Consolidation continues among hospitals, physician practices, insurers and private equity firms. Research presented to MedPAC found that consolidation often raises Medicare and commercial prices, with mixed effects on quality and access.

MedPAC also examined MA risk adjustment accuracy. Even after adjusting for enrollee risk and geography, substantial variations remain. Staff reported that the 90th percentile plan bid is 40% more than the 10th percentile plan bid, suggesting some plans may not be fully compensated for their enrollees’ costs. Commissioners voiced strong support for deeper analysis using MA encounter level data, which could better reflect MA coding patterns, utilization and spending.

MedPAC will revisit these issues in spring 2027 as it develops informational chapters for the 2027 Congressional report.

If you have questions or would like more information, contact Kimberly Greck, ACR® Senior Economic Policy Analyst.