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Medicare reimbursement’s downstream impact

In what will come as no surprise to anyone, Congress will eliminate the pending cut in Medicare physician reimbursement. Not only that, but docs who agree to report certain data to CMS will actually get a 1.5% increase in reimbursement from the Feds.
If you listen very closely, you can almost hear the medical community’s resounding “yippee”.
The reasons docs are not exactly ecstatic about the news are two-fold.

First, the rescission effectively continues already low reimbursement rates for another year. With physician incomes steadily dropping , and many private payers’ reimbursement linked to CMS payment rates, their lack of excitement is understandable.
There is a bit of good news for some docs; reimbursement for Evaluation and Management codes is slated for an increase (really, no fooling…) of up to 30%.
The bad news is other codes (surgeries and the like) may see reductions of up to 20%.
Among the likely downstream effects is a drop in payments to surgeons treating work comp patients. For example, Texas’ work comp fee schedule pays providers 120% of Medicare. The decrease in reimbursement will mean there will be even fewer docs interested in seeing WC patients. Few Texas orthopods have any interest in treating comp patients at the “old” fee schedule; it will be really hard to find any orthopod in Texas in 2007 who will treat a WC claimant.
Second, and even more troubling, is the last-minute, haphazard, blunt-instrument, let’s-hurry-home-for-the-holidays, unthoughtful decision process. Instead of actually doing something about the underlying problems with Medicare, and the US health care system, Congress is just slapping a little more duct tape on the “problem”.

2 thoughts on “Medicare reimbursement’s downstream impact”

  1. Joe, I think you’re getting a bit greedy. Fix the underlying problems with Medicare? I think we should be happy with “first, do no harm.”

  2. As a PPO, we have few problems contracting with Orthos below schedule in Texas at the present time. However, this only applies to physicians that want to treat workers’ compensation. For now there are a lot of them that do want this business.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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