Three bodies shape what Medicare pays. Knowing which one controls a given decision tells you whether it can change this year or requires an act of Congress.
Three bodies determine what Medicare pays and how. Identifying which one owns a given question is the fastest way to judge how quickly it could change.
Congress
Congress writes the statute, and statute governs the things CMS cannot alter. The 2.9 percent payroll tax rate, the existence of the four parts, the 9 percent maximum MIPS penalty, the two conversion factors introduced in 2026, and the requirement that Value-Based Purchasing withhold exactly 2 percent are all set in law. Changing any of them requires legislation.
Congress also creates the durable structures. The Balanced Budget Act of 1997 alone established the skilled nursing facility prospective payment system, Medicare Advantage in its original form, and MedPAC.
CMS
CMS implements statute through notice-and-comment rulemaking, and within the discretion statute leaves it, that authority is substantial. The annual payment rates, the DRG classifications and relative weights, the wage index, the quality measures in every program, and the details of Shared Savings Program tracks are all set by rule. The rulemaking course covered this process in full, including how to participate in it.
The practical implication is that a great deal of what practitioners experience as fixed reality is actually a regulatory choice revisited every year, and therefore open to comment.
MedPAC
The Medicare Payment Advisory Commission “is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33)” to advise Congress on Medicare. It has 17 members, “appointed to three-year terms (subject to renewal) by the Comptroller General.” Its “two reports, issued in March and June each year, are the primary outlet for Commission recommendations.”
MedPAC’s recommendations are not binding. Its March 2018 recommendation to eliminate MIPS has not been enacted, and its long-running analysis of Medicare Advantage overpayment has not produced legislation. What MedPAC reliably supplies is the analytical baseline that both advocates and critics argue from, which is why its reports appear as sources throughout this curriculum.
Worth remembering: when someone says Medicare “should” change a policy, the useful next question is which of these three bodies would have to act. If the answer is CMS, the change could appear in a proposed rule next summer and the comment period is a real opportunity. If the answer is Congress, the realistic timeline is years and the mechanism is legislation attached to a larger vehicle. If the answer is MedPAC, the recommendation is a contribution to debate rather than a decision. Confusing the three produces both false optimism and misdirected effort.
Key takeaways
- Congress sets the statutory structure, including tax rates, program design, and the caps on payment adjustments.
- CMS sets annual rates, classifications, and quality measures through notice-and-comment rulemaking.
- MedPAC has 17 commissioners appointed by the Comptroller General and reports to Congress each March and June.
- MedPAC recommendations are advisory, and significant ones have gone unadopted for years.
Sources
Check your understanding
What authority do MedPAC's recommendations carry?
MedPAC is an independent congressional agency created to advise Congress. Its recommendations carry analytical weight and shape debate, but nothing obliges Congress or CMS to adopt them, as the unadopted 2018 recommendation to repeal MIPS illustrates.