Accepting Medicare is going to cost you

A new study pinpointing how much doctors will lose bolsters worry that practices will limit the number of patients on Medicare.

By Markian Hawryluk, amednews staff. April 22/29, 2002.

Washington -- The average solo physician practice will lose almost $8,000 in revenue this year unless cuts in the physician payment update are reversed, according to a new analysis by the American College of Physicians--American Society of Internal Medicine.

"The more Medicare patients a physician's practice treats, the more its income will fall under the program's reimbursement cuts," the college said. "This will create a clear incentive for medical practices to limit the number of Medicare patients for which it provides care."

Feeling the squeeze

An AMA-backed bill that would limit the current 5.4% cut to 0.9% continues to gain support, with 317 co-sponsors in the House and 71 in the Senate. Lawmakers have also expressed a desire for a longer-term fix to the update problem as part of a larger Medicare reform package to be considered later this year.

The analysis found that a typical solo general internal medicine practice, which derives about 30% of its revenues from Medicare, would experience a decline of $7,884.60, while a typical four-physician group practice would experience cuts of $31,538.40 this year. Although the exact payment updates for future years are not yet known, the Centers for Medicare & Medicaid Services expects continued cuts in physician reimbursement through 2005 under the current formula.

Specialties such as geriatrics will be hit even harder, the college said. Adjusting for inflation, a typical geriatric solo practice will face a shortfall of more than $30,000 a year for the next four years, or $122,520 annually for a four-physician group. This could result in the practice laying off three nurses, or four billers or six clerical workers, the college said.

"Medicare is cutting reimbursement rates while the cost of delivering care is increasing," said William Hall, MD, ACP-ASIM president. "This confluence of events may force physicians to reduce staff, delay buying new medical equipment, or deny accepting new Medicare patients just to keep a practice open."

ADDITIONAL INFORMATION:

Feeling the squeeze

Estimated Medicare cuts in 2002 based on percentage of Medicare patients served in practice

Medicare      Solo         Group   
patients    practice     practice* 
--------   ----------   -----------
10%         $2,628.20    $10,512.80
20%         $5,256.40    $21,025.60
30%         $7,884.60    $31,538.40
40%        $10,512.80    $42,051.20
50%        $13,141.00    $52,564.00
60%        $15,769.20    $63,076.80
70%        $18,397.40    $73,589.60
80%        $21,025.60    $84,102.40
90%        $23,653.80    $94,615.20
100%       $26,282.00   $105,128.00

Figures based on four-physician group practice

Source: American College of Physicians--American Society of Internal Medicine