Another month, another looming 21% cut in Medicare reimbursement rates. Why does this keep happening?

The funding cuts that went into effect April 1 are unrelated to the recently passed healthcare reform legislation. Instead, they stem from the balanced budget provisions approved by Congress in 1997, when Medicare payments to physicians were tied to a funding formula based on a complicated “sustainable growth rate.” But two recessions and other economic problems over the past decade have resulted in required cuts to physician payments in most years even as healthcare costs and operating expenses have increased.

Congress has repeatedly postponed the cuts, allowing them to build to the current levels without ever changing the way payments are calculated. Payments of Medicare claims have been put on hold temporarily to allow Congress time to act once again on postponing the cuts.

If allowed to stand, the cuts would mean that physicians would lose an average of $13 every time they treat a Medicare patient, according to the Texas Medical Association. Payments to physicians have lagged sharply behind Medicare payments to hospitals and nursing homes, which use a different funding formula, according to the association.

The estimated cost to fix the funding gap is more than $200 billion.

To put it another way. The fix would cost about 1/15th that of the total cost of the wars in Iraq and Afghanistan or 1/5th the total cost of the recently passed and signed “health care reform” spending bill.  But somehow I doubt that any significant amount of the almost $1 Trillion allocated in the new spending bill over the next 10 years will be going to properly pay for the highly trained professionals who provide the actual care.

The anticipation is that Congress will once again pass a temporary patch to delay the cuts until about August of this year in the hope that a permanent fix will be able to be worked out. But I say, let the 21% cut stand! This will serve as a message to the one million or so physicians who currently care for Medicare beneficiaries that the Federal government considers payments to insurance companies, pharmaceutical companies, and hospitals to be of higher priority than to health care providers.

Then maybe physicians will become more organized and unified and stop accepting new Medicare patients and even cut back on non-emergent services to Medicare patients. Such a hopefully temporary move would be preferable to sinking deeper into the shrinking reimbursement treadmill that has become the norm for medical care of Medicare patients. Washington may not care about one million providers but Medicare beneficiaries vote and currently there are almost 50 million of them. Angry voters are to politicians like kryptonite is to Superman.

Given the recent difficulty in passing a one Trillion dollar “health care reform” bill, I doubt that the Democratically controlled Congress is going to be in too much of a mood to pass an additional $200 Billion dollar Medicare fix-it bill. But if 50 million angry voters march on Capital Hill – at least symbolically. Well, maybe the politicos will get the hint.

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This entry was posted on April 6, 2010 at 9:51 pm and is filed under Health Care "Reform", Health Policy. You can follow any responses to this entry through the RSS 2.0 feed.