August 3, 2011

Medicare Cuts and What They Might Mean

Filed under: Healthcare — DoNP @ 11:12 am

On the table during this super-committee super-meeting will be the Medicare cuts enacted as part of the Deficit Reduction Act of 2005 (it’s like deja vu all over again). Providers are due for an across the board cut of some 29 percent  based on the Sustainable Growth Rate  (SGR) of ~4 percent per year.  Congress hasn’t had the stomach to allow the annual ~4 percent cuts to go into effect, each year delaying them through some legislative maneuvering.

Should a large cut to Providers get passed, those who cannot afford to operate within these cuts will respond by either dumping Medicare patients altogether or by going non-par (non-participating) with Medicare.  Like Mayo Clinic, hospitals and doctors have the ability to decline the Medicare reimbursement schedule and bill the patient for the full amount of their services.  The patient pays the bill and then gets the Medicare reimbursement to offset their cost, paying the difference out-of-pocket.  The provider gets what they believe is proper value for their service and the patient gets what Medicare thinks it’s worth.  The provider must decide in advance if they are accepting the Medicare amount or not and disclose to the patient their non-par status.  Cutting fees to Providers doesn’t save money.  It either encourages them to do more marginally necessary procedures to make up for their loss of revenue on any one procedure or worse, they stop doing certain necessary procedures because it would be unprofitable to perform them.  Rural clinics will force people to drive into to town to get things done, independent imaging and testing facilities will shut down.  Providers will not purchase the latest technology, the best tools or even attend classes that provide them with anything more than what they minimally need to maintain their licenses.  Family practitioners, who are today barely getting by (there’s already a shortage and there’s no wondering why when the average earnings are around $150K per year) will simply go to the hospital and take whatever they’re offering in the way of a salaried position.  Then, the AHA will have accomplished what they’ve been trying to do for the past 15 years…the hospital (or it’s corporate owner) will be the source of all healthcare from cradle to grave and administrator, not doctors, will decide what you get and when you get it…and you and the government will pay higher rates for everything because Medicare has been swindled by the AHA into offering the hospitals about 30-40 percent higher reimbursements than it pays to independent physicians for the exact same procedure.


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