The Commission was created by the Balanced Budget Act of 1997 under Title XVIII. It is specifically charged to review the effect of Medicare+Choice under Medicare Part C and to review payment policies under Parts A and B. It is also generally charged to evaluate the effect of prospective payment policies and their impact on health care delivery in the US. The former Prospective Payment Assessment Commission (ProPAC) and the Physician Payment Review Commission (PPRC) were merged to form MEDPAC.

Federal program, created by Public Law 89-97, Title XVIII-Health Insurance for the Aged, a 1965 amendment to the Social Security Act, that provides health insurance benefits to persons over the age of 65 and others eligible for Social Security benefits. It consists of two separate but coordinated programs: hospital insurance (MEDICARE PART A) and supplementary medical insurance (MEDICARE PART B). (Hospital Administration Terminology, AHA, 2d ed and A Discursive Dictionary of Health Care, US House of Representatives, 1976)