Reimbursements: What Inaction Will Cause

December 11, 2012
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Here we are again, about ready to end another year with absolutely no progress on changing the “sustainable growth rate,” or SGR which determines how much doctors receive for seeing Medicare patients.

Here we are again, about ready to end another year with absolutely no progress on changing the “sustainable growth rate,” or SGR which determines how much doctors receive for seeing Medicare patients.

In 1997, the SGR seemed like a good idea.  Based on estimated increases in medical costs and the number of Medicare recipients, changes in law/regulations, and a 10-year average of the gross domestic product, the SGR outpaced doctors’ expenses for the first five years, so there was no change in reimbursements paid to physicians.  Then in 2002, the formula was going to trigger a 4.8% cut in Medicare payments.  The resulting outcry from doctors convinced Congress to delay the implementation of the cut, the first time.  The band-aid fix has been close to expiration at the end of each calendar year since, but Congress has devoted time during the last weeks of the sessions to prevent it.  Now, if it goes into effect in 2013, doctors’ will get about 27% less in reimbursements from Medicare because the SGR cut for a given year adds to the rollover amount.

In 2011, when Congress passed the last delaying action, lawmakers said it would give them an entire year to retool the Medicare law.  Despite warnings of what might happen this past summer, that year has come and just about gone without any action on Capitol Hill.  And now that the fiscal cliff is almost upon us, there seems to be little interest in Congress or at the White House to stop what the SGR will do automatically January First.

Unless you are a physician who sees Medicare patients, you have no idea what this will do to healthcare.  Avik Roy, a contributing writer for Forbes Magazine, tells the story about how it will impact Dr. Paul Wertsch, a primary care doctor in Madison, Wisconsin, in his August article, titled “How Obamacare’s $716 Billion in Cuts Will Drive Doctors Out of Medicare.”  Wertsch billed Medicare $217 for a visit by a Medicare patient with a sinus infection whose appointment ran late because of the patient needing the extra time.  Medicare stiffed him and sent only $54 – a fourth of the bill.  Ironically, a younger patient with the same problem presented at Wertsch’s clinic the same day.  This visit required half the time and Wertsch charged the same $217.  The second patient was covered by private insurance which paid the clinic $108 – twice the Medicare reimbursement amount.  Wertsch said he was losing money, so in 2011 his clinic stopped accepting new Medicare patients.

The American Medical Association threw its support behind Obamacare because the White House and Congressional Democrats promised that the law would include a permanent reimbursement fix.  How’s that working out?  Instead of changing the SGR, the Affordable Care Act adds to it by reducing fees even more to health care providers by $415 billion over the next ten years.

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