The Tangential Effects of the Looming Medicare Cut

By now, everyone is aware of the 10.1% cut in Medicare reimbursement landing January 1, but have you looked at the domino effect this will have in your office? Obviously, your Medicare reimbursements will suffer, but look at your contracts with other payors. In some rare cases, those fee schedules might be absolute, but the majority will be based on a percentage of Medicare. The key here is to check what Medicare rates to which the contract refers. Some will refer to a specific year (i.e.1996, 2006, etc.) but some will refer to "current year" rates. TMA has urged plans to not adjust rates if the cut is not resolved in the last two weeks of the session, but you will want to be prepared. Now is a good time to dust off that contract and double-check the basis for the fee schedule.

If you recall a post from a couple weeks ago, I wrote about your decision to stay or not to stay; that is, declaring your Medicare status as participating (PAR) or non-participating (non-Par). The switch to non-Par would mean that you would bill the patient for Medicare services, the patient would pay you and seek reimbursement from Medicare. Not many patients want to deal with this and not many physicians want to talk about medical bills with patients. While the medical arena has experienced a push toward consumer-directed health plans, the 65+ year young population has been the least willing demographic to accept this change. This could make collecting for Medicare-reimbursed services more difficult than it already is.

The AMA has fought for national legislation allowing balanced billing practices for Medicare patients. This would mean that participating physicians would be able to seek additional reimbursement from the patients, which is the same thing that happens with non-participating physicians and their patients. With this, you would at least get the Medicare portion back (directly). Some patients do not understand balance billing, but the AMA feels that patients would openly accept it. You and your staff are the only ones who could know what your patients would or would not accept.

One final, and alarming, affect is the potential implications on access to care and quality of care. Some patients might not be able to afford the charges from a non-Par physician and would be forced to change doctors. If a rash of physicians change to non-Par status, this patient experiences more limited access to care. On the quality side, a physician might see more patients during the day to offset the decrease in revenue (payment decreases, supply increases, revenue stays the same, generally). This means less time spent with each patient, which some would argue decreases the quality of care.

NOTE: We do not endorse one option over the other. One is generally not better than the other. Only you will know what is best for your patients, and only you can make the decision that is best for your practice. After all, you do have to get paid to remain open.

Read: Looming Medicare pay cut forces tough decisions on participation.
Read: AMA to renew fight for Medicare balanced billing
Read: Planned Medicare cuts weigh on primary care