Medicare Proposes a Lower Physician Fee Schedule for 2023

The discrepancy between Medicare and private insurance physicians’ reimbursement has grown over the past 30 years and with the proposed decrease to the Medicare physician fee schedule, private insurers may be left to make up the difference.’s health insurance expert, Melanie Musson explores strategies to avoid higher costs.

Medicare Pays Far Less Than Private Insurers

No one can deny that the Medicare system has challenges. Hospital systems, government agencies, and healthcare providers have been working through these issues for years. For example, in 1993, the National Institute of Health Medicare and Medicaid Research Review released a report sharing that Medicare paid 76% of what private insurance paid for physician services.

That discrepancy has only increased over time so that as of May of 2022, the Kaiser Family Foundation reported that Medicare paid about 70% of what private insurers paid for physician services.

Medicare Proposes a Lower Physician Fee Schedule for 2023

Recently, the Centers for Medicare and Medicaid Services released their proposed physician fee schedule for 2023 in which physician fees are cut by 4.5%. While the economic market is volatile and inflation has led to increasing costs for hospitals and physicians, this pay cut could have a significant impact on private insurers.

Likely, physicians will take a multi-faceted approach to make up for these losses and remain solvent.

For example, they may put a cap on the number of Medicare patients they will accept, and they could try to cut costs by employing digital scheduling. Some specialists, like audiologists, may refuse Medicare patients altogether. But no matter what other strategies they employ, they will almost certainly increase costs for private insurers.

While individual doctors don’t have much say in what the U.S. government decides they’ll pay for services, they have more ability to charge private insurers higher fees.

The Proposed Medicare Fee Schedule’s Impact on Private Insurance

If the proposed fee schedule is enacted, private insurers will need to look at ways to cut costs to make up for the inevitable increase in their physician fees. They may need to examine streamlining requirements for patients.

Private insurers may need to follow Medicare’s lead in some areas. For example, another proposed change for Medicare is the elimination of required referrals before recipients can see specific specialists. Perhaps eliminating the cost of a doctor’s visit for the sole purpose of obtaining a referral could be a way to cut costs.

It’s time for private insurers to comment and resist the proposed physician fee cuts. They’re already paying unfairly higher fees than Medicare is, and if the delicate balance of premiums and claims is disrupted by the decreased Medicare physician fee schedule, private insurers could start facing financial trouble.

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