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    Saturday, January 07, 2006

    Ugh: I just spent the better part of the afternoon doing my least favorite task - reveiwing the financials of my practice. It doesn't look pretty. With Congress electing to decrease my pay by 4%, and my malpractice premium set to increase by 30% you can see it's not going to be a good year. The cost of supplies has been steadily going up, too, as have the cost of services. My medical waste haulers upped their fees by 20% in the past six months due to rising gas prices.

    The Medicare cut may not sound like much, but it translates into a loss of about $2-3 per patient visit. And it isn't just limited to Medicare patients. Insurance companies base their rate of reimbursement as a percentage of Medicare fees. They might, say, pay 110% of whatever the fee Medicare pays. A practice that sees 25-30 patients a day will make $50-$90 less a day in 2006. That adds up quickly. Assuming a five-day work week, that adds up to $13,000 to $23,000 less over the course of the year. And despite what you might read in the newspapers, the majority of patients who pass through a doctor's office have health insurance - so the cut goes across the board.

    How does that translate into day to day life? It means that my staff didn't get a cost of living raise this year. It means that I'll have to drop their health insurance if the premiums increase. And it means that I'm working harder - double booking patients when I can and adding an extra half day to my work week. Hopefully, I'll break even and avoid a decline in my own wages.

    I resent terribly the fact that Congress controls my pay. I'm a virtual civil servant - without the generous pension and benefits. And it doesn't help when they turn around and give themselves a pay raise. My only consolation is, that by making less, I'll be paying them less in taxes.

    UPDATE: This doesn't help, either:

    The United States Postal Service, after a fashion, announced weeks ago that the price of a first-class postage stamp was going up to 39 cents, a 2-cent increase. Tomorrow.

    ....At the Farley Post Office, one of the nation's largest, there were no signs announcing the increase, which the Postal Service said was a result of a Congressional act in 2003 requiring it to put aside more than $3 billion each year into escrow, beginning this year. Congress has not yet decided what the rainy-day fund should be used for.

    The Postal Service, which last raised rates in 2002, posted a profit of $1.4 billion last year. Without the extra money required by Congress, the service said in a news release, "postage rates most likely would have remained at current levels until 2007."


    What do you suppose they'll use that money for? Bridges?
     

    posted by Sydney on 1/07/2006 03:13:00 PM 10 comments

    10 Comments:

    I think it's terribly unfair that Medicare has been arbitrarily reducing reimbursement rates.

    As each new year begins with another rate decrease, I wonder how much longer you and other doctors are going to put up with this.

    By Blogger jerseycityjoan, at 8:39 AM  

    Your pay has not been cut by 4%. If you have a typical primary care practice, your overhead is ~60% of revenue, so even if your other expenses remain static (unlikely), your pay is cut 10%. If your other expenses (rent, electric and phone bill, insurance, salaries) go up by the 4% cost of living index, you have an effective 20% pay cut. Feel better?

    The answer? Drop out of Medicare. You answer, "I can't afford that, and my patients would not be able to see me and they need me." Right on both counts. We are their suckers, and I don't know the answer either. Welcome to the real world. At least we are not commercial airline pilots.

    By Anonymous jb, at 8:58 AM  

    The senate's budget proposal has frozen MCR payments at the 2005 level, meaning no rate cut. The house is expected to follow suit and is supposed to vote on it before the end of january. So your reimbursement will be cut for one month only.
    As for other carriers, their fees are only partially based on MCR's. Many of them use the same RVU system that Medicare does, but they don't use the same conversion factor (Medicare reduced the conversion factor, not the RVU's). Therefore, a Medicare rate cut does not automatically translate into an across the board cut in reimbursement. Furthermore, your contracts with private insurance should protect you from such cuts. If they don't then you need to renegotiate the contracts.
    If you're not willing to do that, then you have nothing to complain about.

    By Anonymous Anonymous, at 8:03 PM  

    Anonymous,

    Many of my insurance contracts are through the two PHO's in town. If you aren't with the PHO, you don't get to see those insurance company's insureds. And most of those are expressed as a percentage of Medicare reimbursement.

    Every community is different, but that's the way it is here.

    By Blogger sydney, at 9:10 PM  

    Anon 8:03PM,

    There's no gurantee the House will vote on the Budget recociliation bill by the end of the month. The controversy over the deep cuts in Medicaid funding (I don't agree with the cuts there) and Nancy Pelosi are what's holding up the bill. The longer the House waits, the more enshrined into law the Medicare cuts will become.

    By Blogger ismd, at 6:55 AM  

    Anon 8:03 is correct- both the Houae and Senate have passed corrective legislation to reverse the cut, but they are not the same bill due to unrelated discrepancies. Congressional action is likely to reinstate reimbursement to 2005 levels, and it will be retroactive to Jan. 1. So, if the currently most likely scenario plays out, the claim you file today for the office visit you did last week will be paid next month at 2006 levels (~4% less than last year), Then, when your carrier receives the updated 2006 (=2005) fee schedule, you will receive the 4% "raise," and your billing staff will have to reverse the old 2006 write-off and enter the new 2006 (=2005) write-off. It only doubles the workload for your billing staff for a month or so of Medicare (and any other fee-linked plan). If you're lucky, only a few of your Medicare patients will call and demand to know why their monthly statements are more indecipherable than usual.

    I have asked my office manager to not submit any Medicare claims this month. It will play poorly with my cash flow, but will save her a ton of extra work next month. If the cut is not reversed, I'll be a double sucker- I'll be out the 4% reimbursement and the interest on a month of cash flow. The best I can hope for is the way it wsa last year, minus the interest on the Jan cash flow.

    By Anonymous jb, at 7:17 AM  

    Syndey,

    I was specifically referring to United Healthcare regarding the comment about RVU's. Other carriers certainly behave differently, so you do have a point there. Where I am, most of the carriers have either already moved to an RVU system or are in the process of doing so.
    A PHO can be a powerful organization if the physicians are willing to turn on the insurance carrier. You're looking at it from the perspective of not being able to see any of carrier X's patients, but what happens to carrier X when their members don't have any participating physicians? A lot of angry members and a lot of angry employers. Feel free to hand them the address and phone number of carrier X's CEO (they love it when you do that).

    -Anon 803-

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    By Anonymous group health insurance plans, at 5:52 PM  

    That's why OB's are leaving in droves: http://www.medicalspasonline.com/the-blog/2006/3/24/obs-are-dropping-babies-for-botox.html

    By Anonymous Jeff Barson, at 11:29 PM  

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