Medicare cut looming

November 1, 2010

As the Centers for Medicare and Medicaid Services prepares to implement a 23.5% pay cut on Dec. 1, physicians who treat Medicare patients are pleading with Congres to intervene and considering their options.

Washington, DC-As the Centers for Medicare and Medicaid Services (CMS) prepares to implement a 23.5% pay cut on Dec. 1, physicians who treat Medicare patients are pleading with Congress to intervene and considering their options.

The cut, mandated by the controversial sustainable growth rate (SGR) formula and postponed after a protracted Congressional battle in June, is scheduled to take effect just 1 month before another reduction of 6.5% occurs Jan. 1.

In a Sept. 29 letter to Congress, the American Academy of Ophthalmology (AAO) joined the American Medical Association, 64 national medical societies, and 24 state societies in asking Congress to take action during the first week of November to avert another crisis. The groups are seeking a temporary fix through at least 2011 to buy time for newly elected legislators to find a solution next year.

It is the fourth time this year that physicians have battled a scheduled cut of more than 20%. Each time, Congress failed to block the cuts, and CMS halted payments until a temporary patch was approved, causing lengthy delays in reimbursement. Practices were forced to borrow money to meet payroll expenses, lay off staff, or cancel capital improvements, according to the letter.

"It's very frustrating," said Brock Bakewell, MD, governmental relations chairman for the American Society of Cataract and Refractive Surgery (ASCRS), which did not sign the letter because it is holding out for a permanent fix.

"In order to run a practice, you need to be able to count on a stream of income from your patients," Dr. Bakewell said. "When those cuts go into effect, it really is disruptive."

With ophthalmology depending more on Medicare reimbursement than any other medical specialty, ophthalmologists are uniquely harmed by the payment instability, said Cathy G. Cohen, the AAO's vice president of governmental affairs. Earlier this year, physicians went 23 days with no cash flow from Medicare, she said.

Options considered

The instability is forcing physicians to examine their options, which could include changing their participation status as a Medicare provider. As a "nonparticipating provider," physicians would be required to bill their patients directly, while Medicare reimburses patients for their medical care. They also can opt out of Medicare completely, and enter into private contracts with Medicare beneficiaries. Physicians may petition CMS to change their status between Nov. 15 and Dec. 31. However, those who "opt out" of Medicare may not switch back for 2 years. ASCRS has assembled a "Medicare/SGR Crisis Kit" to help its members determine whether to change their Medicare participation and alert patients to the potential impact of the pending reductions.

As a nonparticipating provider, payment is not guaranteed because not all Medicare-eligible patients can afford to pay up-front for services, Dr. Bakewell noted. And, with the high percentage of Medicare cases seen, this option might prove especially difficult for ophthalmologists in a high-volume practice, he said.

"Sixty-five percent of my practice is Medicare," Dr. Bakewell said. "If we stopped seeing Medicare patients, we'd have to lay off employees because we wouldn't be as busy."

The income uncertainty makes it difficult to run a business and is demoralizing for physicians, who now must look at alternative ways to raise income, Dr. Bakewell said.

"We're not even keeping up with inflation," he said. "They give us 2% here and there, but quite frankly we've lost over the last 8 years. The government is trying to fix the Medicare problem on the backs of physicians, when physician payments make up only 16% of the whole Medicare pie."

Other options for increasing revenue include doing more research, becoming a consultant for a drug or device company, and opening an optical shop or ambulatory surgery center, Dr. Bakewell said.

"You may deliver less patient care," he said. "It's crazy to keep seeing patients at a reduced level when you can't make your budgetary requirements for your office. You have to do something. . . . There are other lines of business besides your professional fees."

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