That Big New Spending Package and Medicare: A Medicare Customer Question

What You Need to Know

The Consolidated Appropriations Act of 2023 could have cut physician pay 4.5%.
It did cut their pay 2%, starting this month.
Some clients might wonder how that cut will affect their access to care.

Just days before the new year, President Biden signed the $1.7 billion Consolidated Appropriations Act of 2023.

This omnibus spending package included emergency assistance for Ukraine, academic medicine policy provisions, pandemic preparedness funding – as well as funding cuts that could affect Medicare beneficiaries.

Given the scope of the bill and the reporting surrounding it, it can be difficult for beneficiaries to be sure what changes they may see and the potential impact it could have on their ability to access the care they need.

It’s important for Medicare agents to understand what these changes will mean for beneficiaries and be prepared to provide their clients with the resources they have to navigate them.

The Question:

How will Medicare funding cuts affect my client’s coverage in 2023?

The Answer

The current spending bill includes a 2% provider pay cut that took effect at the beginning of this month, which will increase to 3.5% in 2024.

However, this averts an immediate 4.5% cut, as was initially proposed, and gives providers time to prepare for the decreases in payment.

Some health care providers and professionals worry that this cut will affect practices’ ability to take on new Medicare patients.

Medicare reimburses providers at lower rates than patients paying with ordinary commercial insurance or paying out-of-pocket. After adjusting for inflation, Medicare payments dropped 20% between 2001 and 2021, while the cost of running a medical practice surged 39%.

As a result, this cut could force providers to reconsider their Medicare patient load.

While any amount of funding cuts can sound daunting to beneficiaries, it’s important for agents to know the full story.

The bill isn’t designed to harm Medicare beneficiaries, and, in fact, it even makes some meaningful strides to support them in other ways.

For instance, it includes an increase in Medicare funding for rural hospitals, which will improve care delivery.

In addition, a 2% cut is not significant enough to upend Medicare beneficiaries’ care access overnight.