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

Doctors hand showing Medicare checklist

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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. 

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.