The Bigger Picture: Medicare Decision Time

April 1, 2008

Congress has made empty threats to cut Medicare payments before. But this time the risk seems more real - and the cuts are planned for July 1. What to do?


Late last year, Congress stopped the scheduled 10 percent reduction in Medicare payments, arranging instead a 0.5 percent increase through June 30. But get ready to take that cut on July 1 - and another 5 percent reduction in January.

There is still, of course, a possibility that Congress will avert the cuts. Last-minute interventions are becoming a pattern. But Medicare payments to physicians, when adjusted for medical inflation, have been declining for years and will continue to do so. The only question is at what rate this decline will occur.

Remember the story of the frog in the stove pot? He’ll hop out only if there’s an abrupt change in water temperature; as long as the water boils slowly, he’s happy to sit there and stew.

So, doc, how do things look from your lily pad?

According to the AMA, 60 percent of you say you will limit new Medicare patients if the big cut happens, and 40 percent say you’ll also limit your existing Medicare patients or even quit the program entirely.

If you’re serious about reducing your Medicare mix, now’s the time to plan. Some considerations:

Be realistic. Nationally, Medicare is paying about $60 for a 99213 compared to commercial payers’ $90, according to Physicians Practice’s annual Fee Schedule Survey. But these are average prices. And they fluctuate. Before making any decisions, look at how your commercial payments compare to Medicare’s. Keep in mind, too, how your payers have historically responded to Medicare cuts. Most pay a percentage of Medicare, and, over time, the gap tends to narrow.

Plan for growth. If you stop accepting new Medicare patients, you’ll need to get new patients from somewhere else. Medicare represents a median of 28 percent of patient charges in multispecialty groups and half of charges in cardiology, according to the Medical Group Management Association’s Cost Survey.

Have a plan to market or maybe add a new commercial payer contract. Set a target for the percentage of Medicare you want to maintain over time. As your existing Medicare patients move away, die, or otherwise leave your practice, Medicare will become a smaller and smaller percentage of your payer mix if you don’t accept new Medicare patients. Set a trigger point in advance to signal when you would start accepting new patients or decide to allow Medicare to lapse by attrition.

Don’t talk big while acting small. If you can’t, in the end, bring yourself to limit Medicare patients then there isn’t much point ranting about it. Complaining that Medicare is impossible but forging grumpily ahead anyway is a recipe for unhappiness.

Be ethical, but wise. It might even be time to rethink the ethics of Medicare. Some of you may find it uncomfortable to drop Medicare patients - like dumping your own grandmother. David Albenberg, a family physician in Charleston, S.C. who does not take Medicare, sleeps fine at night.

“Some physicians … act in the public interest for the good of society,” he notes. “I missed this class in med school. There are only three things that I care about as a physician: keeping my patients happy and healthy, keeping me happy and healthy, and making certain that our relationship is fiscally sustainable.”

To those who think accepting Medicare is an ethical obligation however poorly it pays, Albenberg has a question: “How ethical is it keeping folks waiting, giving them five minutes of your divided attention, and not listening to them in their time of need? If you can [see] 36 [patients] a day and adhere to my three ethical principles, you are a better physician than I.”

Pamela L. Moore is senior editor, practice management, for Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the April 2008 issue of Physicians Practice.