scorecardDoctors explain why pending 'ominous' cuts to Medicare would limit healthcare for seniors in the new year
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Doctors explain why pending 'ominous' cuts to Medicare would limit healthcare for seniors in the new year

Jason Lalljee   

Doctors explain why pending 'ominous' cuts to Medicare would limit healthcare for seniors in the new year
PolicyPolicy3 min read
  • Reimbursements for doctors who see Medicare patients are set to be cut by up to 8.5% starting next year.
  • Doctors warn cuts will prevent seniors from getting vital health services.

New changes are set to come to Medicare next year. They will likely make expenses tighter for doctors, and put vital healthcare out of reach for some older patients.

The Centers for Medicare and Medicaid Services, a federal agency within the Department of Health and Human Services, announced several policy changes in early November that will come into effect at the beginning of next year.

Among them are Medicare cuts to doctors through the Physician Fee Schedule, which is used to determine which services doctors are reimbursed for, and how much they get. Medicare reimbursement will decrease by about 4.5%, and surgical care will face a nearly 8.5% cut.

"It's affecting how doctors can run their businesses," Christian Shalgain, Director of Advocacy and Health Policy at the American College of Surgeons, told Insider. "I've talked to doctors who are saying, 'I have to decide whether to hire a new person or buy a new piece of equipment.' That's a significant problem from a patient's perspective."

If healthcare providers get less money through Medicare, they won't be able to hire as many nurses, doctors, and other staff, as well as fund necessary equipment for services. It affects the quality of care patients are able to get, and can even impact how many Medicare patients a healthcare provider can take on, Shalgain said.

In years past, Congress has been able to postpone these preplanned cuts until the next year, varyingly achieving full scraps of the plan, or reduced cuts. Doctors' groups lobby annually for Congress to intervene, because they say that it stretches their budgets thin, which is especially a problem given that hospitals are already strained from COVID and healthcare costs are skyrocketing.

Democrats will likely lose control of the House during this year's midterms even as the remaining races remain too close to call. However, they did retain control of the Senate, in a surprising rebuke of the GOP platform. Republicans have signaled an inclination to push for Medicare cuts in general, and having less power than expected for the rest of President Biden's term suggests that preventing the announced cuts this year is more likely.

"The Medicare payment schedule released today puts Congress on notice that a nearly 4.5 percent across-the-board reduction in payment rates is an ominous reality unless lawmakers act before Jan. 1," Jack Resneck Jr., President of the American Medical Association, said in a statement. "The rate cuts would create immediate financial instability in the Medicare physician payment system and threaten patient access to Medicare-participating physicians."

As the amount that Medicare will pay for a certain service decreases, payments to providers across the board go down. That's because private insurance companies use Medicare as a frame of reference, Shalgain said, offering to pay "100%, or 110% of Medicare" for a given service. If the payment for Medicare goes down, then, so does cash from private providers.

"And as that Medicare number goes down, you can't see as many Medicare patients," he said.

A bipartisan effort to pay doctors more

Although Republicans are staunchly opposed to increasing Medicare funding in general, as evidenced by the Republican Study Committee's 2023 fiscal budget, paying doctors more tends to be where Congress can see some bipartisan compromise.

That's what Shalgain is hoping to see come out of a letter released by 46 senators, including Democrats like Elizabeth Warren and Republicans like Rand Paul, asking congressional leadership to address the impending fee schedule cuts before the end of the year.

"It is essential in the coming weeks that we make sure providers have the resources they need to keep their doors open for seniors and families," the senators wrote in the letter, sent the day after the cuts were announced. "Going forward, we support bipartisan, long-term payment reforms to Medicare in a fiscally responsible manner."

Republicans and Democrats are often at odds when it comes to entitlement programs like Medicare and Social Security, with the GOP looking to slash government spending on for both. A bipartisan effort to prevent cuts is at odds with Republicans' current long-term plan for the program, Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens' League, told Insider. The Republican budget will dramatically cut spending on Medicare for new beneficiaries by more than $2,200 per person per year starting in 2030, for instance, and by $8,000 in 2050, according to the Congressional Budget Office.

"We don't know what they're going to do this year," Shalgain said. "If the cut goes into effect, we're going to be on the steps of Congress on January 2nd, asking them to reverse it retroactively."

A previous version of this story incorrectly identified the person who spoke of a letter released by 46 senators. It is Shalgain who hopes the bipartisan effort will block the Medicare cuts.