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What are your options with Medicare’s 40% cuts formula? |
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An interesting article in the “Bulletin of the American College of Surgeons” May 2007 by Barbara Peck, JD, outlined the options in regards to participation in Medicare. I will summarize some the salient points. As Medicare moves towards the 40 percent cuts that are planned under the sustainable growth formula, phlebologists will have to make tough decisions. It may not be sustainable to care for Medicare beneficiaries with those reduced rates.
If your fixed overhead is already over 50 percent then a 40 percent reduction may mean you are working for free. There are basically four options with Medicare:
• participation,
• non participation,
• opting out, or
• not enrolling.
Currently 94.7 percent of physicians are participating; interestingly, it is a number that has been increasing despite cuts in Medicare, leaving little doubt that the government will continue doing just that.
Full Participation
Full participation means the physician will accept the reimbursement levels set by Medicare as full payment and wait on Medicare to pay the 80 percent portion. Most also wait on the 20 percent portion as well from the patients’ secondary. Medicare is generally reliable and relatively timely with payment.
I think this is why so many physicians participate as the commercial insurers will often pay less and with long waits and arguments on what is allowed. If the service is denied, then the physician is out the money unless they have the patient sign a waiver before the procedure. The waiver states that the patient understands that this procedure might be considered not medically necessary (cosmetic) in nature by Medicare. Then the physician can attempt to bill the patient only after the denial.
Non-participation
Non participation allows the physician to charge the limiting charge of 109.25 percent of the Medicare rate. They must collect the payment in full from the patient and then the patient must wait on payment from Medicare and their secondary. For hardships or emergency care, the physician can opt to accept assignment and get paid directly from Medicare, but the fee will be 95 percent of the Medicare fee schedule. The math works in favor of non participation over participation if 35 percent of the patients agree to 109.25 percent fee schedule.
Physicians can decide whether their patient can afford to pay upfront, or not, on a case-by-case basis. This may also save the physician money by reducing the workload of the billing and collection portion of the practice. The physician may also have the patient sign a waiver before any procedure so that they understand that Medicare may consider the procedure cosmetic and not allow payment. If the patient signs the waiver then they are at risk of not being reimbursed rather than the physician who provided the service.
On the other hand, if the waiver is not signed and the service is denied the physician must immediately reimburse the patient. This waiver is important to the phlebologist because many of our procedures could easily be argued to be cosmetic or at least not meeting Medicare’s strict definition of medical necessity.
Opting-out
Next option is to opt out. The physician and patient agree to a fee and there is no limit to that fee. The patient cannot bill any of it to Medicare. None of the ancillary services of the physician can be billed to Medicare either, such as imaging or lab work. The physician can send the patient to the hospital or other participating provider of ancillary services to get their tests done. The physician can also perform surgery in the hospital and the patient’s bill for the hospital can be paid, but not the physician’s portion. This means the physician and his or her patient can still avail themselves to all the same services as always, but only the physicians portion will not be covered.
The only exception is emergent or urgent care. That cannot be entered into by private contract. Instead the physician would file a claim with Medicare and get paid the limiting charge. Therefore the physician who has opted out can still provide emergency care.
After the emergent or urgent situation has passed, then the physician can transfer the patients care over to a participating physician or enter into a private contract with the patient. This could work well for the phlebologist because they do not provide much emergency care. The downside is that there is no reimbursement at all from Medicare for patients who do qualify medically despite the fact they have paid in to Medicare for years. Many patients will resent that fact.
Not Enrolling in Medicare
Lastly the physician can choose not to enroll in the Medicare program at all. Then they are not allowed to see Medicare patients at all or even order tests. The physician would have to give up the Medicare portion of their practice.
It is likely that the sustainable growth cuts in Medicare will go through despite physicians’ complaints because participation has only gone up despite previous cutbacks. Congress will find physicians easy target for budget cuts because there seems to be little consequence to cutting physician fees. Physician’s influence in congress is dropping as apathy replaces participation in the political process through our AMA, state and local associations along with the corresponding PACs. Less then half of the physicians in this county belong. Specialty organizations are also important but don’t carry the same clout as when all physicians stick together.
There is a movement among members of the AMA rather than fight the cuts to seek to allow balance billing. Medicare can then set the fee schedule and physicians can set their own. Patients would be responsible for any fees above the Medicare rate. For elective procedures, patients could “shop” the best price combined with the best service for their money.
This would bring an element of competition, but allow physicians to set a fee they believe is sustainable for their own practice. Younger physicians first entering practice may accept payment if full from Medicare while older established physicians might charge a premium. It only makes sense. VTN
Dr. Edward Mackay, MD, is a specialist in the field of phlebology, and is board certified in general surgery and vascular surgery. He was the first physician in the state of Florida to offer VNUS Closure. He is also the co-director of the International Vein Congress, a major conference for vascular specialists.
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