Wednesday, December 15, 2010

Medicare fee fix

As you may have heard, every year Medicare has to "fix" the medicare physician fee reimbursement to avoid having physicians get a pay cut. Every year we hear physicians voice concerns that if Medicare cuts physician fees by 25% or more, no physician will take Medicare patients anymore or that physicians will go bankrupt taking care of Medicare patients. Medicare patients and advocacy groups voice concern that doctors will limit their access. Deficit hawks argue that passing the "fix" will only make Medicare insolvent faster and/or increase the already alarming federal deficit.

Geriatricians are in a somewhat in a unique position among physicians in that our reimbursement is much more dependent on public health insurances than others. For example my patients are predominantly (>90%) Medicare and Medicaid (most nursing home patients have Medicaid). Without any question, a physician fee cut would hurt geriatricians more than any other specialty. Geriatricians are already the second lowest paying specialty next to pediatrics.

A little bit of math....If a geriatrician's net revenue is $300,000 and overhead is $150,000 and the physician is 100% dependent on Medicare and there is a 25% cut then while the net revenue will decrease by 25% ($75,000), if the overhead remains the same, income will be cut by 50% ($150,000 to $75,000). Now if a nephrologist has net revenues of $500,000 and an income of $250,000 and have 30% of their revenue come from Medicare, they would have a salary cut of $37,000 or 15% of income. Their salary would decrease from $250,000 to $213,000.
While a 15% cut in income is no small cut, it is hardly career ending when the starting salary is so high.

So what is my conclusion? A medicare cut would be devastating for the field of geriatrics which already has fewer and fewer new physicians each year (less than 250 in the country), while having a much smaller impact on other specialties. It would also affect primary care disproportionately as well. But part of me feels that the cuts ought to happen. The deficit can not be quickly wished away. The shortage of geriatricians and primary care doctors will just be prolonged and masked by the 1 year fixes. I would rather have the crises come to a head quickly and dealt with decisively rather than have 1 year fixes that prolong the financial disincentives that keep geriatrics to such a small field. In the long run, it is better to deal with the problem now, even if it is painful, rather than to drag it on slowly and painfully year after year.

My 2 cents.

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