Controversy swirls in Washington, D.C., as Congress decides whether to halt the massive Medicare payment cut for 2008. The payment reduction, confirmed by the Centers for Medicare and Medicaid Services (CMS) on November 1, was first projected to be 9.9 percent. The final reduction amount stands at an average of 10.1 percent for all physician payments, effective Jan. 1, 2008.
Anesthesiologists, as a result of a revaluing of work units, are the only specialists to enjoy an increase. All other physicians will see reductions ranging from 9 percent to more than 14 percent, depending on the procedure codes they bill on behalf of Medicare beneficiaries. Although the reductions are specific to Medicare, experts predict that commercial insurers will follow CMS' lead as they roll out their 2008 fee schedules.
Despite the bad news, hope exists. In early August, the House of Representatives approved a reversal to the payment cuts in its version of the legislation to fund children's healthcare initiatives. Unfortunately, the Senate's version of the bill didn't include that language. This month, reversing the cuts is on the agenda of the Senate Finance Committee, but challenges abound. Funding the reversal tops the list of challenges. The cuts were mandated by a Congressional action a few years back, which was designed to hold down costs in the Medicare program. Reversing these mandated cuts means finding new money to cover the program's higher costs in 2008.
Then, there are reports of decreasing payments to Medicare Advantage health plans and reductions for home oxygen services and medical imaging, among other services. Furthermore, the power split between a Democratic controlled Congress and Republican chief executive means that a presidential veto is not out of the question.
Finally, time is not on our side. The end of the year looms, and the last thing anyone wants is for the cuts to be reversed after the start of the year. Reversing the cuts a few months into the year will result in massive claims reprocessing and refunds. It also would upset Medicare beneficiaries by confusing them about changes to their deductibles. Indeed, a retrospective halt to the payment cut would bring enough administrative costs to offset any gains made.
Medicare payment cuts aren't the only challenges that physicians face in 2008. Expect more employers to offer high-deductible health plans to their employees. This trend means that physicians will encounter more patients who owe larger chunks of their bills. Although some patients are educated about the consumer-directed health plans they choose, they are in the minority. In fact, most Americans assume that insurance will take care of all their health bills, leaving physicians with significant write offs. Patient bad debt is already soaring as the ranks of Americans who are uninsured increases each year.
Regardless of whether they are insured or uninsured, more and more patients are unwilling or unable to pay. Unlike a hospital or other healthcare facility, physicians can't receive any tax benefit from the services they provide to patients who are experiencing financial hardships. Indeed, this new wave of consumerism is rapidly eroding the bottom lines of many physician practices.
Pay-for-performance is rising in popularity, and physicians hope this trend will be a bright star on the horizon. Unfortunately, the lack of consistency in the measures deployed by health plans, as well as in the means of reporting one's compliance with them, leaves physicians questioning the logistics of pay-for-performance. A recent survey by PriceWaterhouse Coopers reviewed 10 major health plans and found 60 different indicators in use - without a single indicator being used by more than one plan.
Physicians also question how these plans are tied to insurance company programs that rank or tier physicians, often without communicating the measures, the scale or the outcome to physicians until after the rankings are published. Perhaps the greatest discomfort physicians have about pay-for-performance is its lack of positive financial impact. Most physicians find the payoffs to be paltry, despite their efforts to make significant workflow enhancements, purchase new technology and meet claims processing requirements.
