The "Doc-Fix" Debacle and Why Medicare Access Is In Jeopardy In Both Salaried and Physician Owned Settings

Don't underestimate the physician dismay over the looming "Doc Fix" debacle. Unless some budget compromise gets hammered out, Medicare is about to stick it to a lot of docs.

Ever since the passage of the Balanced Budget Act of 1997, Congress has been repeatedly delaying a yearly mandated cut in Medicare's physician fees. That statutory reduction has been slowly accumulating through no fault of the physician community and is now estimated to be more than 27%.  Assuming most physicians' practices are made up by a majority of Medicare beneficiaries, that represents a huge hit to their cash flow. KHN has a good summary of the partisan mutual assured destruction that has led us to this crisis here.

The docs are not happy:

From the AMA ("shameful"):

"Congress has again failed to fulfill its responsibilities. It is shameful that patients and physicians are the collateral damage; the citizens of this country deserve better. Congress had the entire year to repeal the broken physician payment formula and provide stability for the millions of seniors...who rely on Medicare... but has failed to act. It is long past time for members of Congress to act decisively and protect access to care for seniors..."

From the American Academy of Family Physicians ("outraged"):

“The American Academy of Family Physicians is outraged that Congress failed to prevent the 27.4 percent Medicare physician pay cut mandated by current law. That failure has presented their elderly and disabled constituents a bitter holiday gift — uncertainty whether their physicians will be able to provide the services they need."

A family physician blogger ("very upset"):

"I have talked some of my colleagues and some of my patients, and all of us are very upset about this. Some of my physician friends are really thinking this time about completing the necessary paperwork to stop accepting Medicare patients. How can any business (except government) run with such uncertainty as not finding a permanent fix to the broken current Medicare system. Patients will be unable to see their physicians, resulting in delayed care, increased hospitalization, and illness."

 From an email that was forwarded to the Disease Management Care Blog:

"Who can help us? 28% cut are you kidding me, some of us cannot sustain the disruption of cash flow.
I had a great home equity line on my house, but it was closed (not just frozen) because my bank just got taken over by the feds."

Observers may believe that the fallout will be limited to the small-business physician-owned practices and that the larger systems with salaried physicians will be able to carry on.  That would be a mistake.

Within each large provider systems, clinical "work units" are still responsible for meeting revenue expectations which, in turn, are tied to physician salaries and non-physician support staff.  A fee schedule cut courtesy of Medicare will be just as much of a problem for them too.

How will both the physician-owned and salaried practices respond?  The DMCB predicts that most will conclude that seeing more Medicare patients (volume) will not make up for the reduction in fees.  As has been noted by persons far wiser than the DMCB, "if you're losing 25 cents on every watermelon you sell, you can't make up for it by selling more watermelons."

As a result, both physician-owned and salaried practices will limit access by Medicare patients. Most will probably continue to see their active and established Medicare patients, but they will functionally "deactivate" their other Medicare patients and decline to take on new ones.  They'll then "backfill" those open appointment slots with patients who have better insurance.  Here's how it's done.

The DMCB will close with three additional thoughts:

1. If rates go down by 27%, there may be increased merit to the notion of "balance billing."

2. "Concierge practices," thanks to this stand-off, just got a lot more attractive to thousands of physicians.

3. Now would be an opportune time for the population health management community to close ranks and communicate with their legislators on behalf of their physician partners.