Physicians Should Prepare Now for Medicare Cuts

February 8, 2014

If Medicare cuts become too cumbersome - independent physicians, employed physicians, and patients will suffer.

Roughly 27 percent of Americans on Medicare are enrolled in a Medicare Advantage plan. Federal funding for this Medicare alternative has already been cut by 6.5 percent this year, and additional cuts are planned. Preliminary 2015 rates for Medicare Advantage will be announced in February and finalized in April.

Hospitals are responding to existing and upcoming Medicare cuts by trimming staff. Lawrence + Memorial Hospital in New London, Conn., reduced its workforce by 33 positions in September 2013. In its press release, the hospital specifically blamed a predicted “$260 billion reduction in Medicare outlays between 2013 and 2022.” Other hospitals are also cutting staff and will continue to do so if Medicare cuts become too cumbersome - bad news for the thousands of doctors who recently sold their practices to healthcare systems.

Cuts to Medicare reimbursement rates and Medicare Advantage are impacting private practices as well. Last November the nation’s largest provider of Medicare Advantage Plans, UnitedHealth Group, sent termination letters to physicians in 10 states. According to an article in The Wall Street Journal, these letters cited “significant changes and pressures in the health care environment.” UnitedHealth Group hopes to trim the program to between 85 and 90 percent of its current size by the end of 2014.

These sudden, drastic cuts threaten patient care and will even force many patients to stop visiting specific physicians midtreatment. However, some practices are fighting back. Judge Stefan R. Underhill, the United States District Judge for the District of Connecticut, issued a temporary injunction in December that prohibits UnitedHealth Group’s planned dismissals in Fairfield and Hartford Counties. Another lawsuit in the state of New York is still pending. The American Medical Association even weighed in when it recently joined with 30 medical associations and physician advocacy groups to oppose “wide-spread terminations in the Medicare Advantage program.”

Additional debates over the future of Medicare cuts will likely ensue over the next few months, but what can practices do in the meantime?

As cuts to Medicare and Medicare Advantage reimbursement rates go into effect, practices that serve Medicare patients must ensure that it’s still profitable for them to do so.

Begin by calculating the amount of time a physician can spend with a Medicare patient before the practice loses money. Next, consult your patient records from the last three months to determine whether physicians are exceeding this mark. If the practice loses money every time it sees a Medicare patient, you must set a strict time limit for physician consultations and monitor any changes over the next three months. If at the end of this time you discover that treating Medicare patients is still a net loss for the practice, then it might be time to reconsider your patient base.

Practices that are removed from Medicare Advantage networks will also need to adjust. If your practice is one of these, and you haven’t already done so, you must inform your affected patients as soon as possible. According to The Washington Post, many patients don’t understand that these terminations were not their physicians’ fault. Help your patients by either referring them to physicians within their network whom you trust, or recommending alternative Medicare Advantage networks that your practice still belongs to.

Taking precautionary measure now will help protect your practice’s long-term viability and reputation without leaving your patients out in the cold.