Tuesday, November 9, 2010

Should Medicare patients fear creeps

There has been considerable concern recently about the viability of physician's practices as they face a dramatic cut in reimbursement due to the need to slow the growth of health care spending.

No where is that more evident than with Medicare.

This last century era government administered health entitlement program now supplies medical coverage for a growing majority of American citizens. And the cost of this coverage is even exceeding its expected growth rate due to an ever aging and sicker population.

In typical bureaucratic fashion to legislate policy, Congress tied the cap on Medicare expenditures to the sustainable growth rate in an attempt to see that health care costs in the program did not exceed GDP (Gross Domestic Product).

This flawed calculation created in the Balanced Budget Act of 1997 has generally resulted in reimbursement rates to Medicare physicians that have not kept up with the real rate of medical inflation.

Yes, this last measure would have been a better metric to use in the calculation. But who knew in 1997.

Now we get to experience the implementation of this policy decades after the budget sensitive Congress of the 90's have mostly long gone. And the results aren't pretty.

Congress and physicians realized shortly after its passage that the SGR was a flawed system. Rather than solve the problem and change the way the Medicare system is funded, though, they have created temporary "fixes" virtually every year since its inception.

These "fixes" have only served to magnify and put off the eventual point where system implosion is expected to occur.

And that point may be here.

The latest physician hostage crisis of course occurred this year with an impending cut that threatened to throttle the rollout of Obamacare and the new federal health regulation. This fix expires on December 1st.

At that point physician reimbursement will be cut an arbitrary 23.6 percent with another 6.5 percent to follow on January 1.

So will the cut happen? (You can read my prior post: "Dear Santa: I want a Medicare fix")

But more importantly what will physicians do?

That is the question that is becoming more and more the topic of not only surgery lounges where physicians commiserate between cases but also the murmur outside the halls of medical meetings.

Certainly I've seen no organized conspiracy. But it is interesting that many physicians across the country are coming to the same conclusion: is it worth it to stay a part of the system.

Booklets and articles have been written about how physicians can leave the Medicare program. Even more concerning are the materials being produced for patients teaching them how to see non-Medicare participating physicians or even to form "direct contracts" with physicians so they can continue their care outside the system.

Historically and currently there doesn't appear to be a wholesale abandonment of Medicare participation. In my home state of Texas, unofficial numbers put the number of physicians that have resigned their Medicare number at less than 500.

But I don't see this as the real problem. I think more likely we are going to see something I like to call "creep."

Let me give you an example. Recently I was asked to provide some strategic review and planning for a practice in another state -- one with a large retired Medicare population. We prepared a detailed analysis of revenue and expense numbers as part of the consultation service, but the physician seemed to gravitate to one report more than the others.

It was a simple calculation that compared the payer mix of the practice based on the number of patient visits. The physician found that 59% of his office visits were Medicare, but that this group only provided 32% of his total revenue.

He became obsessed with the fact that most of his and his staffs work product was only generating a dwindling minority of his revenue. And without my well deserved consultant-paid-advice he reached his own conclusion that if he only made changes in his schedule and payer mix it could start to minimize his Medicare exposure, decrease his work schedule, and likely either see no change or a slight bump in his practice income.

That is the concern. Creep.

As physician practices get tired of the recurrent uncertainty about the future of Medicare payments, will they begin to find the solution may be to limit Medicare patients within their practice, that is to "creep" their schedules -- and not leave the system altogether?

This would have the effect of exaggerating an already access challenged Medicare population. And since we don't have good data on the clinic slots available to Medicare patients it will be difficult to measure the rate of creep until its too late.

Congress will take up the new fix soon, and conventional wisdom dictates that there will be another temporary solution to stabilize physician payments.

But will it satisfy a physician workforce that is tired of the recurrent stress of practice financial viability on an annual or now, even a monthly basis?

I guess we will get see it play out in the health care access of our Seniors.


- Posted using BlogPress from my iPad

Location:Over El Paso, Texas courtesy of American Airlines

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