Costs & IRMAA
MedPAC Opens Study of Whether Medicare Payments Match Actual Costs for Nursing Facilities and Home Health
The congressional advisory commission for Medicare has launched a formal workplan to examine whether two major post-acute care payment overhauls from 2019 and 2020 have kept reimbursement in line with what patient care actually costs.
By the Goodsurance editorial teamOctober 10, 2026
Medicare's independent advisory commission, MedPAC, has launched a new workplan to assess whether the payment systems that reimburse skilled nursing facilities and home health agencies accurately reflect the cost of caring for their patients.
The study targets two significant reforms CMS implemented in quick succession. In October 2019, Medicare replaced its old skilled nursing facility payment model with the Patient-Driven Payment Model, or PDPM, which bases reimbursement on patient clinical characteristics rather than the volume of therapy services delivered. Less than three months later, in January 2020, CMS introduced the Patient-Driven Groupings Model, or PDGM, applying a similar approach to home health agency payments.
MedPAC is checking whether Medicare's 2019 and 2020 post-acute care payment overhauls still reflect real patient care costs.
Commissioners reviewed and discussed the workplan at their October 8 to 9, 2026 public meeting. MedPAC framed the study around a two-sided risk: if payments run too high, Medicare and taxpayers overpay; if payments run too low, patients recovering from hospital stays, surgeries, or serious illnesses may face difficulty accessing the post-acute care they need.
Both skilled nursing facilities and home health agencies are primary discharge destinations for Medicare patients after hospitalizations and serve millions of beneficiaries each year. Evaluating whether the payment systems introduced six to seven years ago still reflect current care costs is a standard part of MedPAC's ongoing work to advise Congress on Medicare payment policy.
The workplan sets the stage for deeper analyses in future meeting cycles. If those analyses identify meaningful gaps between payments and costs in either direction, MedPAC could develop formal recommendations to Congress on recalibrating the rates.
In plain words
A group that advises Congress on Medicare just started a study. They want to know if Medicare pays nursing homes and home health agencies the right amounts. Big changes were made to how Medicare pays these providers back in 2019 and 2020. Now, six or seven years later, the group wants to check if the payment amounts still match what care actually costs. If Medicare pays too much, it wastes money. If it pays too little, patients may have trouble getting care after a hospital stay. The study could lead to recommendations to Congress for changing the payment amounts.
Understand the basics first
Source: MedPAC
Read at the source →