Medicare Pie Cut Thinner

Think of the money that Medicare pays doctors for seeing patients as though it's a pie called the "Sustainable Growth Rate." This pie is not going to get bigger unless Congress cooks some more pies by New Years. Otherwise, when more patients join Medicare and more pieces are needed next year, we will have to cut the pieces that doctors are paid each time we see a patient into smaller and smaller pieces.

I wimped out: I closed my office in 2003 because I saw the costs of the requirements for medical reporting and "privacy" coming and I figured that I could work part time for other people and make more money than I was making as a solo doc. (And I hate the business part of medicine.) I'm not sure how many others are making the same decision, but we often read about "boutique" practices and docs who won't take Medicare or new Medicare patients. Have you noticed how many doctors in your town are adding things like Botox shots, laser therapy and other cash-pay services?

Medicare will cut doctors' reimbursement by 10% in January if Congress doesn't act before the end of the year. This cut is separate from the Veterans Administration, Medicaid and SCHIP funding and is written into the current law. Since many doctors have contracts with insurance companies that pay based on Medicare, the cuts will go even deeper.

If you don't understand the impact that this cut will have, ask the next person you meet who is over 65 years old whether they had to change doctors when they became Medicare eligible. Ask them whether they have any choice other than to use Medicare and how hard it is to get in to see their doctor.

As I've said before, get ready for it to become even harder.

10 years ago, financial advisers told us that Family Physicians shouldn't have more than 20% of our patient population mix made up of Medicare patients if we wanted to stay in business. Since that time, most doctors have worked harder to be more efficient and have cut out any costs in the office that we don't need. My colleagues cannot afford a 10% cut in pay, while all of our costs continue to go up.

Primary care docs are paid about $160 per hour for office visits by Medicare. We are more likely to see the patients who have 5 or 6 diagnoses, 10 or 12 medicines to straighten out, and who bring in a family member to each visit. These patients take time. If the payment goes down to $155 per hour, most doctors will not be able to afford the cut.

In order to earn that money, we need the office and furniture, utilities, supplies for the patient room and office staff, at least a couple of staff members to check patients in and assist us, someone to answer the phones, those phones, refrigerators for medications, someone to handle the billing and banking, and all of the fees and insurance that normal businesses handle, like property taxes, slip and fall insurance, fire insurance, employee tax to the State, property tax on the building, furniture and supplies, and unemployment insurance, etc.


Then, we have malpractice insurance, professional dues to the County Medical Society and most likely our State and national AMA dues in order to remain "Board Certified," State licensing fees, DEA licenses from both the State and Federal systems, hazardous waste disposal fees, CLIA (office lab) fees, and the fees to keep our computer systems that are increasingly mandated by law if we want to be paid the full $160. The new electronic medical records can cost as much as $30-$40,000 per doctor up front and several hundreds to thousands per month.

In addition to these costs, Medicare requires the highest level of reporting, risk and red-tape. This year, there was a planned delay of payment from the Federal government for 2 weeks at the end of October built into the Federal budget to make it appear balanced. There were also unplanned delays when doctors began using the new National Provider Numbers phased in this year as part of the Medicare laws. (A lot of that expensive computer software in the office, at the insurance companies, and at the Center for Medicare and Medicaid Services couldn't handle the numbers.)

Now do you see why I hate business?

For more information and history, read this article or watch this video from the Texas Academy of Family Physicians.

Please consider calling your Representative to the House, your two State Senators, and the White House and ask them to protect Medicare payments to doctors.