In harsh economic times that test doctors’ souls, Buffalo family physician Raul Vazquez performs a lot of tests.

Spirometry. Nerve conduction studies. EKGs. Stress tests. Ultrasound imaging to detect peripheral arterial disease.

For Vazquez, these so-called ancillary services are in fact essential to the financial well-being of his practice. With payment from private health insurers for evaluation and management services continuing to shrink — as evidenced by our 2009 Physician Fee Schedule Survey — physicians like Vazquez can’t get by with old-fashioned primary-care medicine. Merely sitting down with a patient, diagnosing his illness, and writing a prescription won’t cut it anymore. “If you just see patients, you might as well close up,” says Vazquez.

Faced with enrollment declines and dismal investment returns, insurance companies in 2009 accelerated their now-customary pay cuts, according to our latest fee schedule survey. For bread-and-butter office visits for new patients, established patients, and consults, reimbursement declined an average 7.3 percent, our data reveal, and the bellwether 99213 — the most frequently billed code — fell 8.6 percent to $65.49. (Our analysis assumes that physicians reported private-pay allowables — the rate physicians contract for, which typically includes money collected from the patient — as opposed to dollar amounts on the insurance checks they receive.)

Private health plans have been tight-fisted for years, but the gloomy economy only tightened their grip in 2009. When employers lay off workers, enrollment drops in company-sponsored health plans, which means lower premium revenue. And a moribund stock market in 2008 meant that insurers also earned less on their investments. So they try to preserve their profit margins by paying doctors less, says Susanne Madden, president of The Verden Group, a consulting group focused on managed care.

“Payers are cost-shifting to physicians,” says Madden. “By putting downward pressure on physician reimbursement, they don’t have to bump up their premiums as much to maintain their profitability.”

But who’s worrying about physician profitability? Well, you are. And so are we. The skies are gloomy and the rain is falling for private-office physicians; our 2009 Fee Schedule Survey is not exactly forecasting picnic weather. Still, there are some things you can do to get some cover.



The newly ‘generous’ Medicare

Our data reveal a pattern of private-payer reimbursement that’s declining steeply enough to make Medicare’s relatively low-but-stable pay rates look pretty good by comparison.

In 2009, the federal program bumped up its rates for office visits 99213, 99214, and 99215 by 2.5 percent, 2.7 percent, and 2.7 percent, respectively. Reimbursement remained essentially flat for 99212 while falling 5.3 percent for the so-called nursing code of 99211.

All in all, the feds are trying to bolster primary-care doctors who depend heavily on these E&M codes, says Max Reiboldt, CEO of The Coker Group, an Atlanta-based consulting firm.



While private payers have pushed their rates down, Medicare has pushed its rates up. The result? The federal program that used to be a reimbursement floor that everyone built on — “We’ll pay you 120 percent of the Medicare fee schedule” — is becoming the ceiling. In 2008, private plans outpaid Medicare for all levels of established-patient office visits except 99215. In 2009, private payers fell below Medicare on 99214 as well, and the gap between Medicare and private payers on the other codes shrank. In 2008, the average allowable from private payers for 99213 was 120 percent of Medicare. In 2009, it slipped to 107 percent. If this trend keeps up, you’ll be lucky if payers say, “We’ll pay you as much as Medicare.”