The Medicare Payment Advisory Commission (MedPAC) has voted to recommend an increase in Medicare payments for hospitals in 2026. This decision, made during a public meeting, includes a proposal to raise payment rates for general acute care hospitals by the amount specified under current law, plus an additional 1%. The adjustment would apply to inpatient and outpatient services reimbursed by Medicare.
MedPAC also voted to allocate an additional $4 billion to safety-net hospitals, including disproportionate share hospitals and uncompensated care facilities. However, the commission’s plan introduces the Medicare Safety-Net Index, which may shift funding based on the number of fee-for-service Medicare patients treated by a hospital. Critics argue this approach could lead to significant revenue losses for some institutions, especially large providers serving high numbers of low-income Medicare patients.
The commission’s recommendations could increase federal healthcare spending by up to $10 billion in the first year and $50 billion over five years. Despite these increases, many in the healthcare industry express concern that the adjustments will not fully address financial pressures. The American Hospital Association noted that even the proposed payment boost would leave hospitals operating at a loss under Medicare. Similarly, America’s Essential Hospitals stressed the importance of adding funds without redistributing existing Medicare disproportionate share hospital and uncompensated care payments.
“When adding additional funding to support safety net hospitals, policymakers should supplement rather than redistribute existing Medicare disproportionate share hospital and uncompensated care payments,” stated America’s Essential Hospitals, expressing concerns about the proposed redistribution mechanism.
MedPAC’s recommendations also include a new physician pay update and proposed safety-net add-ons within the physician fee schedule, aiming to address payment disparities across the healthcare system. These measures reflect the commission’s ongoing efforts to balance improved access to care for Medicare beneficiaries with the financial sustainability of healthcare providers.
A final report summarizing MedPAC’s recommendations will be presented to Congress in June. However, implementing these proposals will ultimately depend on legislative action.
