THCB’s favorite orthopedic surgeon Eric Novack is grumpy about Medicare’s proposed cuts in physician reimbursement, which are still up in the air as I write. Not sure how much support he’ll get over here on THCB, but it’s ironic that $10 billion is being set aside for health plans and PBMs to reimburse them for possible losses for their role in Medicare Part D, and hospitals are getting a raise. If we are going to cut Medicare, wouldn’t an across the board cut be fairer? Here’s Eric’s thoughts:
Unless Congress acts in the next week, reimbursement to physicians for services provided to Medicare recipients will be cut by 4.4%. The government’s formula for determining the payment rate does not take into account the increasing costs of healthcare delivery. Rather it is based upon such factors as the cost of prescription drugs and general economic factors over which doctors have no control. The reduction is not merely a reduction in the rate of growth of spending. Payments of $100 will become $95.50. And if the Congress’s inaction continues, payment will be less than $75 by 2011. No adjustments for inflation or cost of living are included.
Is all Medicare spending being cut? No, only payments for outpatient services- Medicare Part B- are affected.
Hospital care, paid under Medicare Part A, will get a pay increase of about 4.8%. Managed care plans that get paid by Medicare for managing Medicare HMOs will also get a raise. In both cases, the government’s formula for payment is based upon the medical economic index, which takes into account the costs of health care delivery.
Other than doctors, why should anyone care that reimbursement is going down? What options do patients and physicians have? Doesn’t more affordable mean more accessible?
Nearly 97% of US doctors participate in Medicare. This means that the doctor has signed a contract to accept the rates that the government says it is willing to pay for services. Doctors cannot be selective. They must accept the rate for any and all services that Medicare offers. They cannot tell patients that they will accept the contracted rate for one service, but not another. For example, doctors are not allowed to accept the Medicare rate for knee replacements, but not for hip replacements. This is especially an issue when it comes to the care of very complex conditions, as the level of expertise, time necessary, and potential liability is significantly increased, whereas payment is often only minimally higher than for the care of much simpler cases.
Physicians have several ways to deal with the Medicare cuts. They can retire and stop practicing medicine. Some will. They can see more patients each day, spending less time with each patient. Some will. They can stop practicing medicine and pursue other careers. Some will. They can limit the number of new Medicare patients they will see. Some will. They can drop out of Medicare altogether, requiring Medicare patients to pay completely out of pocket for healthcare services. Some will.
Patients have few, if any, options under the current structure of Medicare. Seniors cannot opt out of Medicare and find private insurance to cover care.
Government fixing of healthcare prices below reasonable market rates will create the medical equivalent of the gasoline crisis of a generation ago. The planned and projected Medicare cuts will have exactly the opposite of the intended effect: seniors throughout the United States will have less access to doctors and healthcare services.
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