The continuing struggle with Medicare

May 2015
By Brad Meyer, Physician’s Forum Reporter

The long awaited legislative repeal of the Medicare Sustainable Growth Rate (SRG) formula is good news for the medical community but falls short from fixing a nationwide healthcare program that places challenges and an increasing financial burden on doctors and physician groups seeking to provide quality care in tough economic times.

It’s no secret the Medicare system is a source of frustration for all concerned. Cumbersome administration, confusing guidelines, and a less than favorable fee structure have caused some physicians to avoid Medicare patients altogether. Change in the way Medicare conducts business − especially fee processing and payment − is essential. In December of 2014, the Centers for Medicare and Medicaid Services informed providers that Medicare Administrative Contractors would hold up the processing of claims containing 2015 services for the first 14 days of January 2015 in order to “implement corrections to technical errors.”

While the notification indicated the twoweek hold on processing and payment should have minimal impact on provider cash flow, the reality is that delays in the processing of invoices for services rendered can have a significant impact on private practice doctors and physician groups that operate on small margins, especially those with a significant number of Medicare and Medicaid patients.

That’s the case for primary care physician Kyle Scarborough, M.D., who has a solo private practice on Houston’s north side. Two weeks is an entire pay cycle for Scarborough’s practice, of which 40 percent comes from Medicare patients.

“Somehow, I will have to come up with the cash to pay my rent, my supply costs and my employees,” said Scarborough. “Is it fair? The reality is I don’t have any say in the matter; I just have to find a way to cover the shortfall.”

On April 1, CMS implement another hold on processing and payment, this time in anticipation of a change in the SRG formula that was ultimately approved by Congress. The CMS notification stated the delay was invoked to avoid implementation of the 21 percent cut in fees required prior to the repeal of the law.

During a recent discussion with Dr. Chris Robertson, an established private practitioner in The Woodlands, Robertson shared his thoughts on the matter. “I was concerned that physicians nationwide would stop taking Medicare if the 21% cuts occurred,” said Robertson. “Although the cuts were repealed, Medicare payments were still held which creates as much stress if not more because there is no certainty of getting paid for service that has been provided. It’s very unfortunate. What other industry operates this way?”

Beginning on April 15, CMS announced it would begin releasing held claims, however paying at the reduced rate, while continuing to hold new claims as they are received, resulting in CMS continuing to hold 10 days’ worth of claims.

For some physicians, it might raise a degree of concern that after the SGR was repealed in April and Medicare ended the processing hold, Medicare charges were still processed at the 21% discounted rate, which was appealed. This sentiment is echoed by Dr. Joel Kerschenbaum, a long time family practitioner in The Woodlands, who stated “Medicare’s action to pay at the 21% discounted rate following the repeal of the SGR formula was contradictory to their earlier communication that they were implementing a processing hold on charges starting April 1 in order to avoid processing any charges at the 21% discount, which is concerning.”

“Physicians like to have trust in their payers, and multiple processing holds followed by processing at discounted rates that were repealed are the types of things that leads a physician to evaluate his/her trust that they will be paid for the quality care they give to each of their patients”, said Kerschenbaum. “These actions could possibly even lead to some physicians deciding to stop seeing Medicare patients.”

Delaying payment for fees that are already low compared to private insurance reimbursements is problematic for many individual and group practices, and unfortunately 2015 is not the first year of Medicare payment processing delays. A two-week delay in Medicare payment processing occurred during most years since 2010, coinciding with the annual deferral of the SRG formula. Hospitals and large physician groups can more easily accommodate a series of two-week delays in cash flow, but the effect on smaller practices can be significant.

Private practitioner Angela Nunnery, M.D. in Kingwood, appreciates that the scheduled fee reduction has been overturned and that a modest increase will be granted physicians for the next five years, but is concerned with the long term future of Medicare. “As the cost of practicing medicine increases, it is important that we practice quality medicine without the threat of lowered payments,” said Nunnery. “The current delays in processing Medicare payments have a tremendous impact on the daily practice of medicine for physicians and hospitals. The physician’s voice must be heard, going forward to insure that our reimbursement reflects the actual costs incurred, and that we receive timely payment for services rendered.”

The fact that hospitals are granted higher reimbursement rates than physicians further accentuates the challenge for independent doctors and group practices. To compensate, Scarborough noted that some physicians are forced to increase their patient load to compensate for reduced fees.

In order to meet payroll and practice expenses, some physicians groups are faced with reducing physician income to balance the practice budget. Disruptions in cash flow have a significant impact on practicing physicians, especially those without hospitals to shelter them from temporary economic turmoil.

Repeal of the Medicare SRG formula is a positive step, replacing the 21 percent reduction in fees and providing a small, be real increase in payment rates for the next five years. But Medicare is far from fixed. As Baby Boomers enter the ranks of retired senior citizens, the amount of medical attention they require will put an even bigger strain on a program that is already too complex and underfunded.

The solution will not be easy, and we don’t have a lot of time. Physicians, medical industry professionals, and lawmakers need to work together to arrive at a workable solution to address the medical needs of Medicare patients and the financial realities of healthcare professionals.

“The Medicare reforms are a mixed bag of demands and opportunity,” said Scarborough. “The overall goals appear to be worthy. The methods of getting there are often difficult and tedious. The doctors and other entities that figure it out will flourish. The ones that don’t, or the ones that never try to begin with because of their political or philosophical differences will move on.”