Unless you have been living in a cave, you are likely familiar with the Fiscal Cliff and what will happen with taxes if Washington fails to act and we go over the edge.( Street Smart Finance had a great post on that if you need more information). One other part of the “Fiscal Cliff package” would mean that Medicare payments to doctors would be cut by 27%. Most people are very concerned, and rightfully so, about tax increases, but the Medicare cuts seem to be sort of an afterthought. Perhaps you aren’t near Medicare age and are having enough problems finding a good insurance plan that you can afford. Maybe you think doctors charge too much, and they need a pay cut. Regardless, if Medicare does cut doctor payments by almost 30%, we can expects some negative impacts on our health care system.
Doctors Charge Too Much
I’ve heard this argument a million times, and I do believe the sticker price on many health care services is too high. However, most doctors don’t get paid the prices they charge. By being a provider for an insurance carrier or government plans like Medicare and Medicaid, doctors agree to accept assignment. That means that they are contractually bound to accept what the plan pays for a service, and they aren’t allowed to bill the patient for overages on covered procedures. Most private insurance companies set their rates around what Medicare pays. You can bet that if Medicare cuts payments, private insurers will as well. Seniors are never the only ones affected by Medicare cuts.
An example that I see very often is with cataract surgery. The surgeon’s rate in our area is about $2500 for that procedure. Medicare pays around $800. That is why you should never feel bad about asking for a cash discount or “the Medicare rate” if you have no insurance. You know the surgeon willingly takes $800 on many cases, so it would be fair to assume that he or she will take less in private pay without the hassle of billing an insurance.
Doctors Will Drop Plans
How much of that $800 will surgeons be willing to cut before they say no more? Providers may decide not to participate in health plans, therefore, if you have Medicare or an insurance that cuts fees as Medicare is set to do, you may not be able to find a doctor who accepts your plan. In this situation, you will be forced to put off procedures or pay out of pocket and file for reimbursement from your insurance. Have you looked to see how much your insurance reimburses for out of network providers? Not much. Plus, you will be submitting the paperwork and dealing with billing issues on your own.
Volume Will Need to Go Up to Replace Revenue
Not every doctor will decide to stop participating in Medicare or similar paying plans if fees are cut. However, if you get a 27% pay cut, you will most likely try to find a way to increase your income. The only way to do this is to see more patients. If you think you only get 5 minutes of face time with your provider now, that will likely decrease. Another way to increase revenue is to limit the number of patients with lower paying plans that you schedule. Doctors might take mostly private pay patients or those who pay extra for premium insurance plans and limit patients with Medicare or poorer paying plans to a few per day. If you have a plan that pays poorly, you will have to wait longer for an appointment.
You Might Have to Make Multiple Visits.
Currently, Medicare has some funny rules about examinations and ancillary testing on the same day. In my practice, if I determine that a patient might have glaucoma, there are three automated tests that are standard of care in glaucoma diagnosis. Those can all be done in one day, meaning that the patient only has to be dilated once. However, Medicare and many insurance plans will only pay for two on the same day. I usually go ahead and do the other one and write it off. The others pay pretty well, and it’s easier on the patient. If I didn’t get paid well for those procedures, I would have to make the patient come back for another visit to bill the other test. Doctors will have to bill every visit and service to maximize revenues, even if it means more visits for patients.
Long Term Consequences
If we do fall off the fiscal cliff and Medicare cuts are here to stay, I see another long term consequence; fewer providers. Medical doctors go to school for 8 years, then complete another 3-5 year residency. Unless you are independently wealthy, most doctors come out of school owing six figures in student loans. It is almost impossible to work a part time job in medical school or residency, and you can’t do a semester here and there as your budget allows. You can’t get a medical degree by going to night school. You pretty much have to suck it up and know you’ll be poor and in debt for many years with the promise of a high paying job at the end of the journey. If there is no high paying job at the end of the tunnel, no one is going to go through that amount of training,and there could be a huge shortage of doctors. An even worse thought is that medical schools would have fewer applicants, and it would become easy to get into school. I’ve always thought that medical students were some of the brightest and hardest working people out there. If you can barely skate by and get into med school, what does that say for the quality of health care in the future?
Before you decide to move to Canada, know that the American Medical Association and other medical lobby groups are extremely powerful and will most likely find a way to either avoid or delay huge cuts to Medicare. This isn’t the first time large cuts have been on the table. However, if there is not some sort of workable solution, instead of across the board cuts, we could be in for a rough ride in the future. I’d listen to DC and get my health savings account maxed out right now!
Do you pay much attention to Medicare? What is your biggest concern with health care cuts?