Medicare Trustees Report Highlights Solvency and Payment Concerns for Physicians

Medicare Hospital Trust Fund Solvent Until 2036, Trustees Report Shows

In a recent report to Congress, the Medicare trustees announced that the Medicare Hospital Insurance Trust Fund is expected to remain solvent until 2036, which is 5 years longer than projected last year. This positive outlook is attributed to greater income and lower expenditures than previously estimated.

According to a senior administration official, the increase in income is due to a higher number of covered workers and average wages per worker. Additionally, a policy change to reduce Medicare Advantage spending has helped lower expenditures in the short-term.

The report also highlights a decrease in the long-range actuarial deficit of the hospital trust fund, which now stands at 0.35% of taxable payroll, down from 0.62% last year. To further reduce the deficit, options include decreasing outlays by 8% or increasing the standard payroll tax rate from 2.9% to 3.25%.

The trustees’ report covers two separate funds: the Medicare Hospital Insurance Trust Fund (Part A Trust Fund) and the Supplemental Medical Insurance (SMI) Trust Fund. While the SMI Trust Fund is adequately financed into the indefinite future, the Part A Trust Fund is financed by various sources, including payroll taxes and beneficiary premiums.

Concerns were raised about low payment rates to physicians, particularly in the long term. The report warns of a negative payment rate update for physician services in 2025 and updates projected to be below the rate of inflation in future years. This could impact beneficiary access to physicians and quality of care over time.

The report includes an alternative scenario where physician payment rates are raised in line with healthcare inflation, which could improve beneficiary access to care. The American Medical Association has called for Congress to address the payment system issues and implement permanent solutions to ensure quality care for Medicare beneficiaries.

Overall, the report underscores the importance of addressing payment rate issues to maintain the financial stability of the Medicare program and ensure access to quality healthcare for all beneficiaries.