CMS Makes Adjustments, as Medicare Heads for Insolvency

CMS makes adjustments that lower seniors’ Medicare premiums, and cuts payments to physicians in 2023 that Congress could reverse.

CMS Makes Adjustments, as Medicare Heads for Insolvency

Medicare is being “adjusted” for 2023, with many seniors paying less, many physicians getting less, and some provider organizations getting more—as the program heads for insolvency.

The Centers for Medicare and Medicaid Services (CMS) announced premium reductions for Medicare Part B, which pays for things like visits to physicians and diagnostic tests, on September 27. The standard monthly Part B premium of $170.10 in 2022 will fall to $164.90 in 2023, a decrease of $5.20. In addition, the annual deductible of $233 in 2022 will be $226 in 2023, a decrease of $7. (Higher income Part B enrollees pay more, and won’t benefit from the reductions.)

The 2022 Medicare Trustees report projects the Hospital Trust Fund (Part A), which is largely funded by payroll taxes, will be depleted in 2028. Every year thereafter, without additional funding, Medicare will only be able to pay a declining percentage of the cost of care.

CMS Cuts Physicians’ Fees

CMS is also making across-the-board cuts in physicians’ fees of 4.48 percent for payments under Part B, and Part A, which covers hospital expenses, including surgeons’ fees.

The CMS adjustments in the final rule on physician payments issued November 1 will make only a marginal difference in the balance of the Part B trust fund, because 73 percent of Part B payments came from the federal government’s general revenue in 2021. Premiums covered only 25 percent of the cost (2 percent came from interest).

Physicians’ groups say the payment cuts could reduce seniors’ access to care.

In addition, surgeons, anesthesiologists, and hospitalists face a 4 percent Medicare cut stemming from the Statutory Pay-As-You-Go (PAYGO) Act of 2010, so their fee cuts will total 8.5 percent.

The American Medical Association states these reductions will cause “the forced closure of physician practices and put further strain on those that remained open during the pandemic.” Doctors want Congress to restore the fees, and adjust them for inflation going forward.

CMS Hikes Advantage Payments

In contrast, Medicare Advantage (MA) plans will receive payment increases of 8.5 percent in 2023, CMS announced in April.

MA plans are private health plans that cover all Medicare Parts A and B benefits and could provide additional benefits. They submit bids by county for a monthly per capita payment that is risk-adjusted for enrollees’ health status.

The payment adjustment is not directly related to the 8.5 percent increase in the Consumer Price Index for 2022. The Medicare Payment Advisory Commission reports MA plans are more efficient, Bloomberg Law reports.

“This year the average MA plan bid to provide both inpatient ‘Part A’ hospital benefits and outpatient ‘Part B’ benefits was 15% less than what it would cost under traditional, fee-for-service Medicare, according to the commission,” writes Bloomberg. “But MA plans are paid 4% more per beneficiary than for similar enrollees in traditional Medicare.”

Nearly half of seniors are enrolled in MA, and they are projected to enroll a majority of Medicare beneficiaries in a few years.

Joe Barnett is a senior editor at The Heartland Institute.

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