Unintended Consequences Mount
Stanley Feld M.D.,FACP,MACE
On January 1, 2013, as part of the law
to delay the “Fiscal Cliff” congress and the President delayed the Doctor fix
for another year.
The Medicare Sustainable
Growth Rate (SGR) is a method currently used by the Centers for Medicare and Medicaid Services (CMS) in the United States to
control spending by Medicare on
physician services.
In the last several years
the SGR calculated reductions in physician reimbursements have been delayed.
The yearly percentage reduction has been cumulative over the last five or six
years.
The percentage reduction
for 2013 was supposed to be 29%. The cumulative reduction due in 2014 will be
over 30% unless the SGR is permanently fixed.
The formula for the yearly
SGR reduction is complicated and defective. Physicians’ reimbursement for
service has been reduced over the years so that a 29% reduction in Medicare’s
physician reimbursement would surpass physicians’ overhead costs for providing
their service.
Physicians could not stay
in business if it cost more to service patients than they would be reimbursed.
Physicians accepting Medicare cannot charge more than the law permits.
Therefore, with the threat
of massive reductions, more and more physicians are opting out of Medicare.
These physicians will serve Medicare patients but the patients have to pay for
the services out of pocket.
In the past patients would
send their paid bill to Medicare and receive reimbursement for Medicare
allowable fees.
The administration’s goal
is to force all physicians to participate Medicare. A new administration
regulation eliminates direct Medicare reimbursement to patients for services
provided by physicians that do not participate in Medicare.
The losers are seniors on
Medicare.
I predicted there would be
a mass exodus of physicians from the Medicare program. if the “Doc Fix” were
not enacted for 2013. Physicians opting out of the Medicare program would put
an added burden on seniors.
Physicians are happy that the reimbursement cuts have
been delayed for another year because they want to be able to service their patients
without putting an additional burden on them.
The government postponing the cut for another year continues
to frustrate physicians because they have to face the same uncertainty next
year.
Neither congress,
physicians nor the administration support the present SGR formula. However the
government is unwilling to spend $200 million dollars to fix the SGR formula.
This year hospital systems are being
forced by the government to receive less Medicare reimbursement in order to pay
for half of the cost of the temporary “Doc Fix.” Hospital systems are not very
happy.
“Although addressing the
Medicare physician payment formula is imperative, cutting reimbursement to one
health care provider to pay another is shortsighted.
These cuts come at a time when
hospitals are making significant investments in technology and facilities to
provide for an aging population.”
Hospital systems claim they continue to struggle with
past decreases in Medicare and Medicaid reimbursements. Government reimbursement represents about 60
per cent of hospital system’s revenue. Hospital systems assert that decreasing
one healthcare providers (physicians) reimbursement to pay for delaying the
“Doc Fix” is coming at a time when hospital systems are struggling for survival.
“ These cuts come at a time
when hospitals are making significant investments in technology and facilities
to provide for an aging population.”
Patients who have recently been in the hospital
recently uniformly complain about hospital bills and hospital co-pays.
When patients study the “Explanation of Benefits (EOB)” carefully they complain about being
billed for procedures they did not receive.
Most hospital bills are impossible to interpret.
Patients also complain about the high salary of
hospital CEOs. These salaries are usually published in local newspapers.
The high
salaries paid to the multitude of hospital administrators are not available to
consumers.
The way hospital systems report their expenses are
not available to the government or consumer protection groups either.
The government should not take the hospital systems
word that the hospitals are losing money because of expenses and low reimbursement.
I suspect there is a great deal of waste, overpayment
and duplication that the government could question.
If all of these expenses are justified the government
should reimburse hospital systems for expenses and provide them with a
reasonable net return. The government should not indiscriminately cut
reimbursement.
There are a lot of dysfunctional activities in the
healthcare system. The dysfunction is a result of massive regulations that are
unenforceable.
It is important to find the root causes of the
dysfunction. The administration should help hospital systems fix the dysfunction
rather than penalize them indiscriminately.
Hospital systems have already been adjusting to these
stresses. They are consolidating and forming regional monopolies in the name of
efficiency.
The result of eliminating hospital competition will
only increase the costs of hospitalization for patients.
Hospital systems are also buying physicians practices
at an alarming rate. Physicians want to practice medicine and not deal with all
the complicated regulations.
Once these
physicians realize that their independence and intellectual freedoms are
compromised there will be further unintended consequences.
If the
administration does not help fix the dysfunction hospital systems will figure
out a way to decrease the impact of the cuts.
The unintended consequence will mount. The cost of
the healthcare system will escalate while the healthcare system will become
more dysfunctional.
The burden of cost increases due to this dysfunction
will fall on Medicare and Medicaid recipients.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.