What Changed in Medicare Payments During the Trump Administration

What the Trump administration did to Medicare payment rates

The Trump administration did not uniformly lower Medicare payments across all services. Instead, payment changes varied by service type, provider category, and year. Some payment rates increased, some decreased, and some stayed flat — the picture is more specific than a single answer allows.

Medicare payment rates are set by Congress through legislation and adjusted annually by the Centers for Medicare & Medicaid Services (CMS) based on formulas written into law. The Trump administration (2017–2021) did not have the power to set these rates unilaterally. What it did control was how those formulas were applied, which updates were issued, and what regulatory changes affected how providers were paid.

The most significant change was the Physician Fee Schedule update for 2021, which included a 3 percent payment cut to most physician services — a cut that was set to take effect in January 2021, near the end of the administration's term. Congress had legislated this cut years earlier as part of the Sustainable Growth Rate (SGR) formula, but the Trump administration did not override it.

Key Takeaways

Medicare payment rates are set by Congress through law, not by any single administration, though the administration implements the formulas and can propose changes.
The Trump administration did not lower all Medicare payments; changes varied by service type, with some rates rising, some falling, and some remaining unchanged year to year.
A 3 percent payment reduction to physician services was scheduled for 2021 under a formula Congress had written into law decades earlier.
Hospital inpatient and outpatient payment rates generally increased during this period, though the increases were often smaller than inflation.
Home health and skilled nursing facility payments saw mixed changes depending on the specific year and service category.

Hospital and inpatient payment changes

Hospital inpatient payment rates under the Inpatient Prospective Payment System (IPPS) increased most years during the Trump administration, though the increases were modest. For example, the fiscal year 2020 update included a 1 percent increase to the base payment rate, and fiscal year 2021 included a 3.25 percent increase. These increases were smaller than the rate of inflation during those years, meaning hospitals' real purchasing power did not grow proportionally.

Outpatient hospital payments, governed by the Outpatient Prospective Payment System (OPPS), also saw annual updates. The 2020 OPPS update included a 1.75 percent increase, and the 2021 update included a 2.75 percent increase. Again, these were modest increases that did not keep pace with rising costs for labor, supplies, and equipment.

Physician and practitioner payment reductions

Physician payments under the Physician Fee Schedule faced the most direct pressure. The 2021 fee schedule included a 3 percent payment reduction that was set to take effect on January 1, 2021. This reduction was the result of a statutory formula — the Sustainable Growth Rate mechanism — that Congress had written into law in 1997. The Trump administration did not create this cut, but it also did not seek a legislative fix to prevent it.

In prior years, Congress had repeatedly passed temporary measures to prevent or delay these cuts, but by 2021 no such measure was in place. The reduction affected most evaluation and management services, surgical procedures, and diagnostic services paid under the fee schedule. Some services were exempt or had different payment adjustments, but the broad impact was a decrease in what Medicare paid physicians for most services.

Home health and skilled nursing facility payments

Home health agencies and skilled nursing facilities (SNFs) experienced different payment trajectories. Home health payment rates were adjusted annually, with some years seeing increases and others seeing decreases or freezes. The Home Health Prospective Payment System (HH-PPS) updates varied based on the home health market basket index and policy adjustments.

Skilled nursing facility payments under the SNF Prospective Payment System (SNF-PPS) also varied year to year. The 2020 SNF update included a 2.4 percent increase, while other years saw smaller increases or adjustments. These rates are tied to a market basket formula that reflects the costs SNFs face for labor, supplies, and services.

Why payment rates matter to Medicare beneficiaries

When Medicare payment rates to providers are low or decline, beneficiaries may face reduced access to care. Providers who lose money on Medicare patients may limit the number of Medicare patients they accept, close locations, or reduce services. Some providers respond by shifting costs to patients through higher copayments or by billing for services that Medicare does not cover.

Payment rates also affect whether providers invest in new equipment, hire staff, or expand services in underserved areas. A provider operating on thin margins may defer upgrades or avoid opening in rural or low-income neighborhoods where patient volume is lower.

How payment rates are set going forward

Medicare payment rates are determined by Congress through legislation, not by any single administration. Each year, CMS issues updates to the various payment systems — the Physician Fee Schedule, Inpatient Prospective Payment System, Outpatient Prospective Payment System, and others — based on formulas Congress has written into law.

Congress can change these formulas through new legislation. It has done so repeatedly, particularly to prevent physician payment cuts. The formulas themselves are complex and involve adjustments for inflation, productivity, quality metrics, and other factors. Understanding what changed in any given year requires looking at the specific payment system and the specific formula that applies to it.

Frequently Asked Questions

Did Medicare payments go down for all providers during the Trump administration?

No. Hospital inpatient and outpatient payments generally increased most years, though modestly. Physician payments faced a 3 percent cut in 2021. Home health and skilled nursing facility payments varied by year. The answer depends on which type of provider and which year you are asking about.

Who decides Medicare payment rates?

Congress sets the formulas for Medicare payment rates through legislation. The Centers for Medicare & Medicaid Services (CMS) applies those formulas each year and issues the annual updates. The administration implements the law but does not unilaterally set the rates.

How do lower Medicare payments affect me as a beneficiary?

Lower payments to providers can reduce access to care if providers limit Medicare patients, close locations, or reduce services. Some providers may also increase copayments or offer fewer services. The effect varies by provider type and location.

Will the 2021 physician payment cut still happen?

The 3 percent cut that was scheduled for January 2021 did take effect. Congress would need to pass new legislation to reverse or modify it, as it did with previous cuts under the Sustainable Growth Rate formula.

Where can I find the current Medicare payment rates?

CMS publishes payment rates and updates on its website, including the Physician Fee Schedule, Inpatient Prospective Payment System rates, and other payment system updates. Your provider can also tell you what Medicare pays for specific services.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.