Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid

Fact Sheet: Majority of Hospital Payments Dependent on Medicare or Medicaid; Congress Continues to Cut Hospital Reimbursements for Medicare

It is broadly acknowledged that Medicare reimburses hospitals less than the cost of providing care and their reimbursement rates are non-negotiable. The Medicare Payment Advisory Commission found that hospitals experienced a -8.5% margin on Medicare services in 2020, and it projects that margin will fall to -9% in 2022. Combined underpayments from Medicare and Medicaid to hospitals were $100 billion in 2020, up from $76 billion in 2019. Exacerbating this pressure is the fact that Medicare and Medicaid account for most hospital utilization. In fact, 94% of hospitals have 50% of their inpatient days paid by Medicare and Medicaid and more than three quarters of hospitals have 67% Medicare and Medicaid inpatient days. Because of the fixed nature of these payments, hospitals are unable to fully absorb the tremendous inflationary forces they are currently facing.

A new AHA report highlights the significant growth in expenses across labor, drugs and supplies, as well as the impact that rising inflation is having on hospital prices. Further cutting Medicare payments to hospitals and health systems will threaten access to care for patients and communities. As COVID-19 cases and hospitalizations are increasing in most parts of the country, now is the wrong time to reduce payments to providers who remain on the front lines of the pandemic and are working to address the backlog of care that was deferred.

 

page 1 chartpage 2 chartpage 2 chart 2

Related Resources

Letter/Comment
Public
AHA expresses concerned about some MA plans’ inappropriate restrictions on beneficiary access to medically necessary care, including those highlighted in a…
Letter/Comment
Public
AHA letter to the Centers for Medicare…
Letter/Comment
Public
June 17, 2022 The Honorable Chiquita Brooks-LaSure Administrator Centers for Medicare & Medicaid Services Hubert H. Humphrey Building 200 Independence…
Letter/Comment
Public
AHA urges Congress to act now to prevent additional Medicare sequester cuts to hospitals scheduled to go into effect on July 1, 2022.
Action Alert
Member
As Congress begins its scheduled district and state work periods, the AHA is asking hospital and health system leaders to contact their lawmakers and urge them…
AHA Center for Health Innovation Market Scan
Humana recently said it plans to open about 100 new primary care clinics in a second joint venture with the private equity firm Welsh, Carson, Anderson…