June 23, 2025
Earlier this month, the Medicare Payment Advisory Commission (MedPAC) published its latest Report to the Congress.
Among the recommendations for revising the Medicare Physician Fee Schedule and related policies, the Commission recommended that “Congress should direct the Secretary to improve the accuracy of Medicare’s relative payment rates for clinician services by collecting and using timely data that reflect the costs of delivering care.”
MedPAC contracted with ARC to conduct simulations of the fee schedule based on alternative data and changes to specific aspects of the algorithm used to allocate practice expense and malpractice expense relative values. We worked closely with MedPAC staff to examine the effects of potential modifications to the algorithm to reduce practice expense payments for facility-based services, given the growing share of physician services delivered in facility settings where these expenses are paid through other Medicare payments. Our team used claims and other data to examine the effect of various scenarios not only on fee schedule payment amounts but also the effect of these changes on individual providers, examining the effect both across specialties and within each specialty.
Click here for the full report. MedPAC’s discussion and recommendations with regard to the physician fee schedule are in Chapter 1, and a summary of our scenario modeling is presented in Table 1-A1.