Medicare rate cut not coming to physicians in January after all

The consensus among American physicians regarding this legislation remains that it is not really a cancellation. Only in Washington is a six month deferment a "cancellation." It merely moved the implementation date to July 1, 2007 for a 10% cut, with an additional 5% cut to occur on January 1, 2009. The small increase of 0.5% in reimbursements for six month is considered meaningless by physicians, who have been in limbo for over six years due to the inaction of the Congress in placing a functional repair in place to match increases in costs. Current estimates are that reimbursements are 5% below where they were six years ago, and the manner in which the Centers for Medicare calculates rates is openly known to reflect a payment 12% below the cost in an ideal production environment.

Since the participation contract in Medicare is a year-long contract, physicians are effectively being promised a 4.75% cut for the year. WHile Medicare has offered an additional 45 days to think it over, most physicians have no confidence in the system, and have become demoralized trying to make their voices heard. Practices can no longer defer investment in infrastructure, salary increases for employees, maintain overhead in rural of lower volume office, or afford to see dual-eligible Medicare-Medicaid patients. For the most needy, practices are reimbursed so far below the cost of care it is a charitable exercise, but with all the legal responsibilities and expenses that come with modern medical care.

No sane businessperson would sign a contract which effectively results in a cut in reimbursement even farther below costs in mid-year. America's Medicare beneficiaries must prepare themselves to become beggars as an enormous wave of physicians protects their survival by taking action to limit or avoid Medicare services.

Doctors have only three options, and none of thm are satisfactory for physicians or their patients.

(1) "grin and bear it" -take the specified cut. Most will respond by dealing with problems for less time, refusing to authorize medications or consultations, and demanding patients return more frequently for briefer visits (favored by the reimbursement formula).

(2) "grin and the patient bears it" - physicians are permitted to declare themselves as nonparticipating and charge 9.25% about the participating rate, usually collecting the money up front. This improves the collects on the coinsurance and compensates for the lack of apprpriate raises in the participating rate. A little known fact is that the collection rate on Medicare coinsurance is usually 50% or less. This option means patients must pay in advance in full or a sbstantial deposit, and wait for Medicare to reimburse them about 70% of their cost. This is the most likely avenue most practices will take in the next year.

(3) "Opt-out" - the most dramatic and punitive option, crafted by the health care COngressman Pete Stark, punishes both the Medicare beneficiary and the physician who want to do the American thing- contract for services.In order to negotiate a simple payment for services, a physician must refuse Medicare insurance altogether for two years (on pain of imprisonment). Just to make this option completely punitive, Mr. Stark's legislation, implemented in the 1990s, makes sure that the beneficiary gets not money from Medicare whatsoever for these services.

In summary, the Medicare system is nearly beyond repair. Given Congressional inability to effectively deal with the subject other than increasingly inept patches for shorter periods of time, it seems likely that physicians will take the matter into their own hands, and beneficiaries will be paying more out of their pocket.

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