Medicare reimbursement for 2025 is lowest since 1993


On 1 July, I retired from my 37-year faculty gig. Among other things, this meant shifting from private insurance to Medicare. I haven’t yet used my Medicare coverage, but my wife, who retired two years ago as a faculty at a different university, has had no difficulties with her transition to Medicare. So far.

 

The Medicare Conversion Factor (the multiplier used to calculate payment rates for each service or procedure) for 2025 will be the lowest since 1993. How did that happen?

“First, CMS takes the current year CF and then removes the financial support that Congress allocated for 2024, which expires at the end of the year. For 2025, most of the reduction in the CF comes from the loss of this support.

“Next, CMS adjusts the CF by an amount specified by Congress. Despite years of inflation, by law, the adjustment for 2025 is 0%, just as it has been every year since 2020. Unlike other fee schedules, there is no standard annual inflation adjustment for Medicare providers.

 

“Finally, CMS applies a "budget neutrality adjustment." Due to a law Congress passed over 30 years ago, the projected cost of the changes that CMS makes can't raise spending by more than $20 million in a year. As a result, CMS must apply a "budget neutrality adjustment" to the CF, reducing the amount.”

Point the finger at Congress:

“ . . . in reality, much (though certainly not all) of the challenges with the CF are statutory in nature, meaning they are due to laws passed by Congress and out of the control of CMS. Reviewing the steps in the CF calculation, only Congress can allocate funds to increase the CF and help it keep pace with inflation, and only Congress can adjust the outdated budget neutrality adjustment.”

This is not sustainable and will certainly affect access to health care for Medicare beneficiaries in the future. I realize that the author of the linked article is not a disinterested party, but rather than ad hominems, how do we solve this problem? All the other industrialized nations on the planet seem to be able to deliver healthcare to all their citizens at half the cost. Of course, most of their domestically trained physicians aren’t saddled with enormous tuition debt.

https://www.medpagetoday.com/opinion/second-opinions/111312?xid=nl_secondopinion_2024-08-04&mh=eb71348a5ff6ae370cc6759bc5dc3300

 

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