Physician fees will change – are you paying attention?

Congress and the White House are working to come up with a fix for Medicare’s big-and-getting-bigger physician reimbursement (RBRVS) problem. And as I’ve been saying for months, when (not if) this happens, it will have dramatic effect on health care delivery, health care costs, and insurance premiums for work comp, group, and (obviously) Medicare and Medicaid.
Briefly, the change will increase reimbursement for primary care/cognitive services/99xxx CPT codes and slightly raise payments for surgery, radiology, and similar services. The changes occur over time, with a 1.3 percent raise this year plus another 1 percent in 2011. In 2012 and 2013, primary care and preventive services get an additional raise equivalent to the increase in the gross domestic product at the time plus 2 percent, non-primary care would see a raise of GDP plus 1 percent.
The reasons Congress must address Medicare physician reimbursement are twofold; docs are increasingly dropping out of Medicare, and the current SGR process (Sustainable Growth Rate, the methodology in place today that determines what Medicare pays docs) is both responsible for that problem yet ‘fixing’ SGR will mean Congress has to recognize a quarter-trillion dollar addition to the deficit.
It’s not quite that straight forward, but pretty close. For those who want way more detail, read this.
What is clear is that Congress has to act; what’s holding up resolution now is the GOP wants the fix to be deficit neutral, while the Democrats don’t. This will get resolved this week or early next (the current fix expires May 31) but there will be plenty of political point-making over the next few days. How they handle the budget issue, while significant in the large scheme of things, is a longer-term problem. Over the near term, payers and providers will have to figure out how the revisions will impact the industry.
Here are a couple scenarios to ponder.
Work comp – I discussed this in detail a couple weeks ago; the net is 33 states base their WC fee schedule on RBRVS, the key word being ‘base’. A few directly tie their fee schedule to RBRVS, but most adjust the conversion factors, alter the RVUs, add a multiplier, or otherwise tweak RBRVS. And, some states do this thru the regulatory process, while others require legislative action to make significant changes to their fee schedules.
As a result, the state-level implementation of any changes CMS/Congress makes to RBRVS is unclear, state-specific, and politically influenced.
Group – Many network contracts are based on Medicare’s RBRVS; if the Feds change, provider compensation will too. Think about the potential impact, and think deeply. The trickle-down will likely cause specialists to seek higher network reimbursement for two reasons – first the base from which their reimbursement (RBRVS) has declined, and second, they’ll want to make up their lost revenue from Medicare by increasing reimbursement from private payers.
Finally, there’s an inherent problem with the SGR approach – SGR attempts to use price to control cost. The complete failure of the SGR approach to control cost is patently obvious, as utilization continues to grow at rapid rates. This was a problem four years ago, and its done nothing but get worse. Not only does the RBRVS/SGR approach contribute to cost growth, it also ‘values’ procedures – doing stuff to patients – more than listening to them. Sure, the changes will somewhat address that issue, but only somewhat. And we’ll still be stuck with a system that almost entirely bases physician compensation on paying for procedures.
And the more procedures that are done, the more docs make, and the higher costs are.
What does this mean for you?
Pay attention to the news on this change, and think thru the long term impact on your business.

2 thoughts on “Physician fees will change – are you paying attention?

  1. Joe– I have one small/large niggle with this post. You say that the budget issue– that large part of a trillion dollars– is a longer term problem. The markets are telling us as I write that this is no longer true. The unsustainable sovereign debt crisis is here right now, shredding asset values around the globe. The days of putting off and putting off are ending. What will be the fallout from that?

  2. And when there aren’t enough doctors to take care of all of the new insureds…then what do we do? Maybe open the border with Mexico so we can get treatment down there?