ICYMI: FY federal budget brings mixed news to providers, as some hospitals and practices are merging, closing or shrinking services. These are among the news stories that caught our eye in recent months.
Thanks to the diligent efforts of large media outlets, coupled with ongoing support and news reporting from advocacy groups including the American Hospital Association (AHA), the news continues to be full of the latest information on healthcare prior authorizations, telehealth coverage, and the lack of improvements to Medicare physician reimbursement.
Federal budget for remainder of FY25 maintains telehealth coverage, doesn’t address 2.83% Medicare physician reimbursement cut
On March 15, the president signed into law HR 1968, the full-year continuing resolution (CR) that funds the federal government through the end of September 2025.
CR continues Medicare telehealth waivers and the hospital-at-home program through the end of the fiscal year ending Sept 30. For now at least, coverage remains in its current form for Medicare telehealth visits, expanded during the height of the COVID-19 pandemic. That coverage had been seen at risk, which would have negatively impacted short-staffed providers’ ability to see more patients, more efficiently, and enabling rural and less-mobile patients to receive healthcare services more effectively. A renewal of add-on payments for rural and “super-rural” ambulance services were also included through Oct. 1, 2025.
The legislation signed into law does renew a boost to the Medicare work geographic practice cost index, which benefits rural physicians. It also delays eliminating Medicaid Disproportion Share Hospital (DSH) payments for some more than 2,500 safety-net hospitals through Sept. 30, which were set to be eliminated starting April 1. Even then, it could still cause a loss of $8 billion of reductions annually in each of the fiscal years from FY26 through FY28.
The legislation does not, however, include provisions to address a 2.83% cut to Medicare physician reimbursement, making a bad situation worse for the over 1.8 million providers who serve a total of more than 67 million Medicare patients in a time of provider shortages, higher provider costs and an aging U.S. population.
According to the Bruce Scott, MD, president of the American Medical Association, this legislation “locks in a devastating fifth consecutive year of Medicare cuts.” When adjusted for inflation, Medicare payment to physician practices has dropped 33% since 2000, the AMA noting that further cuts will force more practices to scale back services or close, particularly in rural areas.
Advantum Health continues to closely monitor changes to federal reimbursements, ongoing coverage expanded during the COVID-19 pandemic for telehealth visits — the latter providing significant support for both short-staffed practices as well as rural and often elderly patients — and will report back and advise customers as situations evolve.
AMA cites study on rising payer denials
In an annual physician survey of the impacts of prior authorizations, the AMA reports (see PDF) that 30% of respondents stated they’ve seen an increase in denials the past year.
Payer denials have now reached an average of $5 million per provider, the AMA study notes.
As Advantum Health frequently states, this means that an efficient revenue cycle management process is mission-critical to speed and maximize appropriate reimbursements from Medicare, Medicaid and private insurers using an integrated front- to back-office solution that speeds and helps ensure cleanly coded claims that prevent prior authorizations or referrals.
The 2024 AMA PA survey reported that 29% of participants reported that prior authorization has resulted in a serious adverse clinical event, and over 90% stated that prior authorization, if not done correctly, negatively impacts patient clinical outcomes and delays in care. A total of 80% said that prior authorization delays or denials negatively impact patient out-of-pocket costs, and provider reimbursements.
According to the AMA report, “The PA process continues to have a devastating effect on patient outcomes, physician burnout and employee productivity. In addition to negatively impacting care delivery and frustrating physicians, PA also leads to unnecessary spending, such as additional office visits, unanticipated hospital stays and patients regularly paying out-of-pocket for care.”
These outcomes demonstrate why Advantum provides not “only” billing services, but also end-to-end, advanced and proprietary technology-supported RCM team that delivers:
- Quality-controlled medical billing and coding
- Proactive denial management and prevention
- Automated provider enrollment and credentialing
- Seamless prior authorization and accurate eligibility verification
- Quality-controlled billing
- CMS-compliant auditing to optimize risk management
- Focused Accounts Receivable follow-up
Decelerating growth for Medicare Advantage plans, but top original Medicare for first time
The annual 2025 Medicare Advantage competitive enrollment report by healthcare advisory firm Chartis and consulting firm HealthScape Advisors said the market is undergoing a period of correction, following rapid growth in the early 2020s.
However, this year Medicare Advantage overtook original Medicare as the plan of choice for people 65 years and older, those with disabilities or end-stage renal disease who need healthcare coverage.
Currently, 51% of those on Medicare have a Medicare Advantage plan, compared to 49% of those who have original Medicare, according to the report. Last year, there was a 50% split in enrollment for each. This compares to five years ago, when 60% of seniors had original Medicare and 40% were in a Medicare Advantage plan.
MA growth has skyrocketed in the last five years due in part to the aging demographics of post-WWII Baby Boomers. An interesting trend is that for the first time, original Medicare enrollment has not declined, despite MA gaining the upper hand in market share. Last year was the highest on record for overall Medicare growth, and this year is expected to be the peak annual age-in for Medicare overall, according to the report.
MA plans have faced increasing headwinds of higher-than-expected utilization and low reimbursement rates declining payment rates, medical cost pressures, regulatory burden and less-favorable star ratings. Several plans exited the market, and others such as Aetna and Humana reduced their service areas. Many for-profit insurers have chosen to slow growth or even contract membership due to financial pressures. This has resulted in a flattening of MA plans available nationally, the report said.
Adding to MA’s margin challenges are providers who are making the decision to cut their ties with MA plans rather than deal with delays in prior authorization and claims payments.
Hospital closures continue to climb in 2024-25
The continued shift to outpatient services versus more-expensive inpatient or hospital-based services and declining reimbursement continues, as hospitals, clinics and practices accelerate the closure or merger of facilities and services in many areas across the U.S.
As of this writing, Becker’s Hospital Review has tracked 25 hospital and emergency department closures in 2024 and, to date, 10 thus far in 2025 alone. As one report shows (and logic tells us), this means a continued consolidation of services in less-accessible regional hospitals, clinics and practices, as well as a loss of thousands of jobs for highly skilled healthcare professionals.
“America’s hospitals and health systems are grappling with significant challenges, including broken supply chains, workforce shortages, cyber threats and behavioral health issues,” Alicia Mitchell, senior vice president of communications for the AHA, said in a statement. “At the same time, chronic government underpayments and restrictive commercial insurer prior authorization policies further strain hospitals, as they strive to provide patient care.”
As hospital financial struggles persist, around 37% of facilities are still operating at a loss, leading to difficult decisions like layoffs, service-line cuts, outsourcing and an increasing number of hospital closures in 2025.
Beth Feldpush, DrPH, senior vice president of policy and advocacy for the America’s Essential Hospitals, also reported that challenges such as high labor costs, supply chain disruptors and rising cyber-security threats are pressure points for already struggling hospitals.
Dr. Feldpush also pointed to ongoing concerns over potential Medicaid funding cuts, which could have significant impacts on hospital revenue, specifically those in rural or underserved areas. “[T]here is no way that the healthcare system could absorb those cuts without facing the closure of many more hospitals.”
Making prior authorization reform a reality
On March 25, AMA president Bruce Scott, MD, posted that “Reducing the prior authorization burden that harms patients and frustrates physicians is an area of bipartisan agreement that Congress should tackle now.”
Again, the AMA cites the latest nationwide survey of 1,000 physicians across a broad range of practice settings. More than one in four physicians said prior authorization had triggered a serious adverse event (including hospitalization, permanent impairment or even death) in a patient under their care. Further, 82% of physicians surveyed reported that patients had abandoned treatment altogether due to prior authorization issues with insurers, while 94% said poorer clinical outcomes were directly linked to prior authorization.
Responding physicians reported an average of 39 prior authorization requests each week, with 75% of those surveyed reporting that denials had risen, in many cases significantly, over the past five years. On average, handling those requests for a single physician requires 13 hours of physician and staff time each week, reducing valuable time that could otherwise be spent directly on patient care.
As Dr. Scott notes, “The result? Higher physician burnout, lower practice productivity tied to diverted time and resources, and higher practice costs. The wasteful roadblocks to treatment payers place in front of physicians are even greater when projected across the entire healthcare system. That’s because resources are diverted to ineffective initial treatments (such as inappropriate step-therapy requirements), and higher overall utilization results when patients seek emergency care or are hospitalized when their health worsens due to prior authorization denials.”
Advantum Health is proud to be on the forefront of helping our customers effectively deal with prior authorizations, comprehensive coding, denial management and prevention, automated payer enrollment/credentialing, eligibility verification, CMS-compliant auditing and, of course, the entire front- to back-end billing process.
Potential federal cuts to Medicaid and SNAP could trigger loss of million-plus jobs, reduced service and lower state revenue
Potential Medicaid and SNAP cuts discussed by some federal policymakers could lead to more than one million lost jobs and a $113-billion reduction in states’ gross domestic product (GDP) by 2026.
According to an analysis of The Commonwealth Fund posted March 25, across the U.S., state and local tax revenues could plummet by an estimated $9 billion if proposed Medicaid and Supplemental Nutrition Assistance Program (SNAP, or “food stamps”) cuts are enacted. Cuts still under consideration could include $880 billion in Medicaid cuts and at least $230 billion in SNAP cuts over 10 years, estimating the impact of broad-based funding reductions across all 50 states and the District of Columbia.
What’s next…
Stay tuned for more healthcare revenue cycle industry updates in our regular Revenue Cycle Round Up series, where we share the latest trends in revenue cycle payer reimbursements, compliance, IT and operations. Let us know if there are topics you’d like us to cover!