What's The Big Deal About A 2% Cut?

                              What is the big deal about a 2% cut in Medicare spending?

Actually, this is the question on the minds of a lot of people today. Two percent doesn't sound like much, but in an economy of rising unemployment, foreclosures, and rising fuel prices it means a lot! The results can be far reaching and devastating causing the financial situation in this country to worsen for several reasons. Let's take a look at some ways that it will affect your practice or business. 

According to an article written by Mark Crane on medscape.com, this 2% cut could lead to job losses in the healthcare industry.

"Earlier this week, American College of Physicians President David Bronson, MD, told Medscape Medical News he 

worries about the deleterious effects of budget cuts for agencies such as the Centers for Disease Control 

and Prevention, the US Food and Drug Administration, and the National Institutes of Health. A report released 

jointly by the American Medical Association, the American Hospital Association, and the American Nurses Association 

found that:

"766,000 healthcare and related jobs could be lost by 2021 just
because of a 2% cut in Medicare payments."

It is a steep and vicious cycle downward both for the physician, healthcare workers, support staff and patients.

"Overall, the cut will mean $11 billion less for doctors, hospitals and other providers in 2013. "One in five Medicare patients already is facing difficulties in finding a doctor to take them. If you cut their pay, this access problem will only get worse."
The threat of payment cuts isn't new for doctors who treat the nation's 47 million Medicare patients." 

• If you cut the physician's pay, they are going to look at alternative ways to make up the difference so that they can stay in business. 
• The doctor may be faced with the decision of staff cuts. Who would be let go? 
• The work load will increase on his already overwhelmed staff. 
•  Up-coding or bill fraudulently for services not rendered are a greater temptation.

 Possible Solutions:

• Outsource medical billing to a reputable medical billing company. Research proves that this is a viable option because you would be saving money on office space, utilities, professional fees, insurance premiums, vacation pay, etc. This option could save thousands of dollars annually.
• Maximize income by minimizing lost revenue through re-submission of unpaid claims, rejected claims, etc. There is huge loss of revenue from simple errors that may be time consuming, but worth the effort in reimbursement.
• Refuse to treat Medicare/Medicaid patients. That is a trend across the nation, but it will not help in the long run. Yes, their payments may be much smaller than the commercial insurers, but it still is a source of income! Small amounts do add up in time.

That brings us to another effect of the Medicare cuts... the elderly patients on fixed incomes who come into your office. Many of them are facing financial strain already because of added responsibilities of raising grandchildren or helping their children who lost jobs and homes because of the downturn in the economy. They are paying more for their medicine to sustain their quality of life and they trust you as their doctor to provide the care that they need. When you turn them away because it does not seem financially feasible to continue their care, you are turning away some little grandchild's future with their grandmother or grandfather. They are forced to make tough decisions that may be ultimately detrimental to their health. 

• If you do not treat them, they may be forced to find a doctor with much less expertise than you have. They lack the patient rapport that you have.
• The patients are less likely to tell a new doctor everything because they do not trust him or her fully. This can be medically devastating!
• They are not as likely to seek healthcare for early prevention of diseases such as cancer, heart disease, and other silent killers. 
• They may not purchase the needed medications because they can't afford them, thus causing  preventable illness or death.

By eliminating the Medicare and Medicaid patients, that leaves you with self-pay customers, commercial insurance beneficiaries and military or worker's compensation patients. Here is the problem. 

• The self-pay are un-insured and may be slow pay so you end up writing their bills off unless you have a very good medical billing specialist and collections agency.

• The commercial insurer beneficiaries still have co-payments and co-insurance payments. If their policy is at 70/30 or 80/20, you still need to collect those percentages.  

So, you can see that the 2% cut does make a big difference overall. There are a lot of tough decisions that physicians must make, but the right ones could lead to better quality of life for your patients, financial health for your practice, and overall peace of mind.

Thanks for reading.

Donna McHugh, CMRS

Resources:

1.  http://money.cnn.com/2013/03/02/smallbusiness/medicare-doctors-spending-cuts/index.html

2.  The Daily Buzz, Larry Weston AMBA,  Article: CMS describes how sequester will be applied to Medicare payments

3. .http://www.huffingtonpost.com/robert-kuttner/us-budget-cuts_b_2850554.html

4.  http://www.medscape.com/viewarticle/780133  CMS Now Says Sequester Medicare Pay Cut to Kick in April 1
by Mark Crane