Every March, the healthcare industry eagerly awaits the Medicare Payment Advisory Commission’s (MedPAC) Report to Congress. At Kovo RCM, we believe that exceptional revenue cycle management goes beyond just processing claims—it requires a strategic understanding of the federal policies and advocacy efforts that impact our clients’ financial futures.
The newly released March 2026 Report to the Congress: Medicare Payment Policy outlines significant recommendations that could reshape the reimbursement landscape for 2027 and beyond. Here is a breakdown of the key takeaways from the report and what they mean for your practice’s revenue cycle.
1. Payment Updates for Physicians and Hospitals
MedPAC’s latest recommendations reflect an ongoing balancing act between recognizing inflationary pressures and maintaining Medicare’s fiscal sustainability.
- For Physicians: MedPAC is actually recommending a 0.5% payment increase above what is currently written in law for 2027. However, because a temporary 2.5% statutory bump expires at the end of 2026, clinicians will still face a net reduction in their payment rates (estimated at 1.2% to 1.7% lower than 2026). MedPAC’s recommendation is intended to cushion this blow, but margins will still be tight.
- For Hospitals: The Commission recommends adhering to the base payment rates reflected in current law for acute-care hospitals. However, they are strongly advocating for a transition to the Medicare Safety-Net Index (MSNI), recommending a $1 billion pool to better target funds to hospitals serving low-income populations.
The RCM Impact: With physician payment updates functionally resulting in net cuts, and hospital base rates strictly controlled, capturing every earned dollar is critical. Our team ensures that your claims are comprehensive, compliant, and optimized so you maximize your legitimate revenue within these tightly controlled fee schedules.
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2. Heightened Scrutiny on Medicare Advantage (MA) Coding
One of the most eye-opening figures in the 2026 report is MedPAC’s estimation that Medicare will spend roughly $76 billion (14%) more for MA enrollees this year than it would for similar beneficiaries in traditional Fee-For-Service (FFS) Medicare. MedPAC attributes this largely to “favorable selection” and “coding intensity”—the tendency for MA plans to record more diagnosis codes to drive up risk scores. Even with the ongoing phase-in of the V28 risk adjustment model, MedPAC estimates that coding intensity will still increase MA risk scores by about 4% over FFS levels.
The RCM Impact: In response to federal pressure to rein in MA costs, these plans are highly likely to tighten their own auditing, claims scrubbing, and prior authorization processes. Our Clinical Documentation Integrity (CDI) and coding teams are hyper-focused on ensuring your patient acuities are accurately captured without triggering red flags for over-coding, protecting your practice from costly MA takebacks and audits.
3. The Ongoing Push for Site-Neutral Payments
MedPAC continues to advocate for expanding site-neutral payment policies. The Commission noted that current site-neutral rules (which pay certain off-campus hospital departments at lower rates) saved Medicare $1.2 billion in 2024. Looking ahead, they are urging further expansion, pushing to align payment rates across hospital outpatient departments, ambulatory surgical centers (ASCs), and freestanding physician offices whenever it is clinically safe and appropriate.
The RCM Impact: Site-of-service billing errors are already a frequent source of payer denials. As site-neutral policies inevitably expand, our technology and billing experts proactively map and validate service locations to ensure claims are billed accurately the first time, preventing delays and revenue leakage.
4. Impending Squeezes on Post-Acute Care (PAC) and Other Facilities
MedPAC’s report indicates that FFS Medicare payments to post-acute providers remain substantially higher than the cost of care, leading to recommendations for direct base rate cuts across several sectors for 2027:
- Home Health Agencies (HHAs): Recommended 7% reduction.
- Inpatient Rehabilitation Facilities (IRFs): Recommended 7% reduction.
- Skilled Nursing Facilities (SNFs): Recommended 4% reduction.
- Hospice & Outpatient Dialysis: Recommended 0% update (eliminating the planned current-law increases).
The RCM Impact: For our post-acute and specialty care partners, these proposed cuts and frozen rates mean margins will become exceptionally thin. Reducing days in A/R, fiercely appealing unfair denials, and streamlining the intake-to-billing cycle are non-negotiable strategies we employ to insulate your bottom line from aggressive reimbursement changes.
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Why Your RCM Partner Matters in a Shifting Policy Landscape
The MedPAC March 2026 report is a clear signal that federal payment policy will continue to prioritize cost-containment, site neutrality, and strict oversight of coding practices. Navigating these changes requires more than a billing vendor; it requires a strategic advisor.
At Kovo RCM, we actively track congressional advocacy, MedPAC recommendations, and CMS rule-making to anticipate changes before they impact your practice. By staying informed, we adapt our workflows, update our compliance standards, and provide you with the financial predictability you need to focus on what matters most: patient care.Read the MedPAC report here: Medicare Payment Advisory Commission’s (MedPAC) Report to Congress.
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