Doc Fix goes down. 21% Medicare payment reduction for physicians. Expect physicians to opt out

Jun 17, 2010

: Image by Valentin.Ottone via Flickr

The Senate decided to close debate on the “doc fix”, setting the stage for the death spiral of Medicare. Already paying below market rates, expect that a substantial number of physicians walk away, as they face a river of red ink from practices being asked to work for free (or less).

June 17, 2010 — In a last-minute shock to physicians, the Senate voted today against postponing a scheduled 21% reduction in Medicare reimbursement to physicians and other health providers.

A compromise proposed by Sen. Max Baucus (D-MT) was defeated largely along party lines, with no Republican support. The compromise was put forward after the Senate had rejected a $140 billion finance package yesterday that would have delayed the cut in Medicare payments to physicians until 2012, along with measures to extend unemployment benefits and provide $24 billion to states to cope with their Medicaid programs.

The lower-spending compromise bill, dropping the total cost to $118 billion and the overall deficit impact from $79 billion to $55 billion, would have delayed the planned Medicare cuts and provided a 2.2% raise for physicians through November 30, rather than for the 19 months mandated by the earlier bill.

The implications are pretty big…as we head into time where boomers will be hitting Medicare, we won’t have many docs left to serve them. From the revenue side, this adds years to “Medicare coverage” while gutting the access to actual physician services. Why? Physicians have already stopped accepting money from government programs in Medicaid…and now Medicare payments move into this realm of providing services at a lower price than it costs to deliver them.

I expect a number of physicians to either drop Medicare or retire. This is one way to limit dollars spent, but by cutting off the program at the knees.

The American Medical Association (AMA) warned that unless Congress restores the cuts, physicians will limit the number of Medicare patients they treat. A survey of 9000 members revealed that 17% of physicians — and 31% of those in primary care — would take such action because Medicare rates are too low.

I’m all for cutting the total cost of Medicare and know there are a number of incentives we can change to do this. But I’ve always favored disruptive change that rewards better performance over legislative change bringing force without necessarily allowing for workable solutions or caring about the collateral damage.