Medicare Expense Constantly Rising, Why?

Even as Medicare Expenses rise and inflation causes increased cost, incresasing premiums, physician reimbursement are reduced annually. 

Physician reimbursements have been reduced annually due to several factors:

• The 2025 Medicare Physician Fee Schedule introduced a 2.83% cut, marking the fifth consecutive year without meaningful congressional action to address declining reimbursement rates. 

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• This reduction is attributed to the expiration of a temporary increase in payment rates and the expiration of the Medicare Access and CHIP Reauthorization Act, which froze fee schedule inflation updates until 2026. 

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• Over the past two decades, physician payments have declined significantly, with a 33% drop since 2001 when adjusted for inflation, while practice costs have risen sharply. 

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• The ongoing debate focuses on balancing cost control with fair compensation and ensuring access to care for Medicare beneficiaries. 

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  These factors contribute to the ongoing challenges faced by physicians in maintaining their practices and providing necessary care.
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• How are we still in business> The answer is, we are not.  Individual practice is about gone. Medicine has gone coporate. Individual doctors or small groups have been. forced to sell to hospitals, venture capitalists,or whoever is foolish enough to purchase their practices. Gross income looks abundant, but the details are in payables, overhead, and bureaucracy from Medicare, and Private payers.
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• Key Medicare Incentive Programs

  Merit-based Incentive Payment System (MIPS): The main component of the QPP, MIPS scores clinicians across four areas: 

  Quality: Reporting on patient outcomes and measures.

  Cost: Tracking patient-specific costs.

  Advancing Care Information (ACI): Meaningful use of Electronic Health Records (EHRs).

  Clinical Practice Improvement Activities (CPIA): Participation in activities improving care.

  Outcome: Positive scores can lead to bonus payments, while poor scores can result in penalties (up to 9% adjustments). 

  Promoting Interoperability Program (formerly EHR Incentive Program): Incentivizes hospitals and eligible professionals to adopt and meaningfully use certified EHR technology. 

  Electronic Prescribing (eRx) Incentive Program: Rewards successful electronic prescribing for Medicare Part B beneficiaries and penalizes non-prescribers. 
•  The Medicare budget is balanced by reducing payments to providers and incentivizing Medicare Advantage plans. The insurance lobby rules Congress.

Medical Economics

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