Upcoming Medicare Changes in Domestic Policy Megabill Impact Coverage and Payments

The proposed domestic policy megabill, pending further votes in the U.S. Senate and House, includes significant changes to Medicare, impacting its 68.5 million beneficiaries. One key provision would trigger an automatic 4% cut in Medicare payments beginning in 2026, resulting in a projected $500 billion reduction over eight years, unless Congress intervenes. This payment adjustment is linked to the bill's substantial fiscal measures affecting various social programs.

Another notable adjustment would permit individuals who are eligible for Medicare Part A but remain employed and enrolled in high-deductible health plans to continue contributing to health savings accounts (HSAs). Currently, such contributions are prohibited after Medicare Part A enrollment. The bill also proposes to increase contribution limits to HSAs, potentially aiding seniors in managing out-of-pocket healthcare expenses during retirement.

The legislation aims to expand the classification of rural emergency hospitals, enabling more healthcare facilities in underserved regions to sustain operations. This measure addresses access challenges in rural healthcare delivery and could influence hospital participation in Medicare programs.

Additionally, the bill allocates $25 million to the Department of Health and Human Services for hiring AI data scientists and contractors to enhance efforts in identifying and recovering improper Medicare payments. This reflects a growing emphasis on leveraging data analytics and artificial intelligence to improve program integrity and reduce fraud.

Finally, the bill delineates clear eligibility criteria for Medicare benefits by excluding undocumented immigrants from coverage while maintaining eligibility for Lawful Permanent Residents, certain Cuban immigrants, and residents under the Compacts of Free Association with specific Pacific Island nations. This clarification may affect Medicare enrollment demographics and compliance requirements.

These proposed changes underscore the interplay between fiscal policy and Medicare's framework, highlighting potential shifts in funding, program access, and administrative oversight. The bill's progress in Congress will likely focus on balancing cost containment with maintaining beneficiary protections and healthcare access.