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HUGE BACKDOOR CUTS IN MEDICARE

MEDICARE AND MEDICAID UNDERPAID U.S. HOSPITALS BY $100 BILLION


Update: According to the latest American Hospital Association's fact sheet, combined underpayments were $100.4 billion in 2020.

For Medicare, hospitals received payment of only 84 cents for every dollar spent by hospitals caring for Medicare patients in 2020.

For Medicaid, hospitals received payment of only 88 cents for every dollar spent by hospitals caring for Medicaid patients in 2020.

In 2020, 67 percent of hospitals received Medicare payments less than cost, while 62 percent of hospitals received Medicaid payments less than cost.


In 2019, Medicare and Medicaid underpaid U.S. hospitals by about $75 billion in 2019. This includes a shortfall of $56.8 billion for Medicare and $19.0 billion for Medicaid.

For Medicare, hospitals received payment of only 87 cents for every dollar spent by hospitals caring for Medicare patients in 2019.

For Medicaid, hospitals received payment of only 90 cents for every dollar spent by hospitals caring for Medicaid patients in 2019.

In 2019, 63 percent of hospitals received Medicare payments less than cost, while 58 percent of hospitals received Medicaid payments less than cost.


This shows there's been very minimal improvement since these figures were measured in 2017.

2017 Figures:

According to the American Hospital Association's 2017 figures, Medicare and Medicaid underpaid U.S. hospitals by about $76.8 billion in 2017. Underpayments occur when the payment received is less than the cost of providing care, that is, the amount paid by hospitals for the personnel, technology and other goods and services required by the hospital to function.

Medicare underpayments in 2017 totaled $53.9 billion and Medicaid underpayments $22.9 billion.

Also, in 2017, hospitals provided around $38.4 billion in uncompensated care. (Healthcare Finance News, 1-4-19)

To add to this, in 2017, 66 percent of hospitals received Medicare payments that were less than cost, while 62 percent of hospitals received Medicaid payments that were less than cost.


Doctors Are Being Underpaid

A result of hospitals being underpaid is that doctors and other health staff are being underpaid as well.

Current Medicare payment system on an unsustainable path | American Medical Association (American Medical Association, 2021)

The AMA is deeply alarmed about the growing financial instability of the Medicare physician payment system due to a confluence of fiscal uncertainties physician practices face related to the pandemic, statutory payment cuts, lack of inflationary updates and significant administrative burdens.

The evidence is clear: The Medicare payment system is on an unsustainable path threatening patient access to physicians.

Are primary care physicians underpaid? New study suggests the answer is yes (Medical Economics, 7-1-19)

A new study from Merritt Hawkins compares the average salaries of 19 medical specialties compared to the average annual inpatient/outpatient revenue they generate for their affiliated hospitals.

Essential but undervalued: Millions of health care workers aren’t getting the pay or respect they deserve in the COVID-19 pandemic (Brookings, 5-28-20)

Overworked, underpaid: Local doctor says COVID burnout straining healthcare workers (WRAL, 4-21-22)