Medicare physician reimbursements continue to decline while practice expenses increase dramatically. This pressing problem has prompted neurosurgery’s practice administrators to ask what they can do to support organizational efforts that address this and other daunting Medicare issues.
Medicare physician fee schedules are updated annually based on a statutory formula designed to control the rate of growth in spending for physician services. The Centers for Medicare and Medicaid Services adjusts the update annually depending on expenditures compared to a target rate called the sustainable growth rate. The SGR is calculated based on increases in the number of beneficiaries, projected growth of the economy, medical inflation and changes in the law.
Reimbursements would have been reduced nearly 10 percent in the past three years if the Medicare Prescription Drug Improvement and Modernization Act of 2003 had not replaced the proposed 4.5 percent decrease under the SGR update with a 1.5 percent increase in 2004. Looking ahead, physicians will receive negative updates (decreases) of approximately 5 percent each year from 2006 through 2012. In other words, physicians will receive less reimbursement in 2012 than they did in 2002 for the same procedures.
Decreased Medicare reimbursements often mean decreased insurance reimbursements. Commercial insurance fee schedules are increasingly tied to Medicare fee schedules. For example, one carrier may reimburse at 140 percent of the Medicare rate, while another may have contracted at 165 percent. As Medicare’s rate decreases, so do commercial insurance payments.
In addition, organizations that provide re-pricing services to client companies may negotiate additional discounts for self-funded employer plans based on Medicare reimbursements. For example, a surgical code originally negotiated at $1,000 may be discounted by $150 because the Medicare allowable charge is only $850.
The first step you should take is to know what Medicare changes are occurring and how those changes will affect your business.
Of paramount importance to neurological physicians is the rising cost of medical liability insurance. In some states, carriers no longer offer professional liability insurance or the price of coverage has become cost prohibitive. Many physicians are moving their practices to neighboring states with comparatively affordable premiums and favorable business climates.
Keep your patients informed on how this will affect them. Some practices have used newsletters and pamphlets to explain to patients how decreasing Medicare payments and medical liability issues are affecting the physician’s ability to deliver care. In addition, some offices have created an open letter to patients encouraging them to contact their congressional representatives.
Take the time to visit your state and federal representatives yourself. Speak to them face to face about how Medicare and medical liability reform issues affect care and the ability to continue doing business. Follow up with a letter thanking them for their time and reiterating your major topics of discussion.
Get to know your regional Medicare medical director. Correspond and speak with this individual when needed.
Also, when contracts are up for renewal, read and negotiate each section. Know whether the organization with which you are negotiating is also a re-pricer of claims. Do not assume that negotiation is impossible, even if you have had contracts with given area payers for more than a decade. You may be surprised what you can do, especially if your specialists are needed to maintain a complete panel.
Network with other practice administrators. Join professional organizations such as NERVES, the Neurosurgery Executives’ Resource, Values and Education Society; the American Medical Group Association; the Medical Group Managers Association; and other associations that actively promote your profession. Perhaps consider participating as an officer or delegate. Sharing ideas, experiences and resources will enrich you, the organization, your business and your profession.
Attend local, state and national healthcare conferences. These activities provide continuing education, networking opportunities, ideas and resources for every practice.
Become involved in the business community. Look for opportunities to educate others about your unique specialty and the challenges it faces. Because Medicare reform affects a large section of most communities, openly address the issue as it relates to your patients and practice.
Look for opportunities to participate in focus groups or healthcare forums as well, to educate others on Medicare reimbursement or medical liability reform.
Practice administrators have the unique opportunity to interface with other healthcare businesses, multidisciplinary professionals, legislators, the community and patients. Your sphere of influence is greater than you think.
Tresa Sauthier, PhD, is the liaison of NERVES, www.nervesadmin.com, to the AANS/CNS Washington Committee. She is chief executive officer of Neurosurgical Associates of Northeast Arkansas PA, Jonesboro, Ark.