Hospitals Say Increased Medicare Reimbursement Is Not Enough: Kiplinger Economic Forecasts

The industry says the 3.1% bump isn't enough coming off its worst financial year of the pandemic.

To help you understand what is going on in the U.S. healthcare system and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...

Hospitals will receive a 3.1% payment bump for 2024 under a rule recently finalized by the Centers for Medicare and Medicaid Services that sets Medicare reimbursement rates for inpatient, or hospital, care. The final rate increase should boost annual payments by $2.2 billion. 

Hospitals are still unhappy with the final rule, even after officials bumped up the reimbursement rate increase from the initially proposed 2.8%. The industry cites inflationary pressures hurting its bottom line, amplified by the fixed nature of Medicare payments. Hospitals say last year was the most financially challenging of the pandemic, though their margins have improved this year, along with consumer demand for medical care. 

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More than 36% of Americans are on Medicare or Medicaid, per the 2020 U.S. Census, and a majority of hospital payments depend on Medicare or Medicaid. Indeed, over 90% of hospitals have at least 50% of their inpatient days paid by Medicare and Medicaid. Three-quarters of them have 67% Medicare and Medicaid inpatient days.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Matthew Housiaux
Reporter, The Kiplinger Letter
Housiaux covers the White House and state and local government for The Kiplinger Letter. Before joining Kiplinger in June 2016, he lived in Sioux Falls, SD, where he was the forum editor of Augustana University's student newspaper, the Mirror. He also contributed stories to the Borgen Project, a Seattle-based nonprofit focused on raising awareness of global poverty. He earned a B.A. in history and journalism from Augustana University.