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As Medicare Payment Reduction Takes Effect, Physicians Need to Look at Options
How to Cope With Lower Medicare Payments in Your Practice
By Sheri Porter
The pay cut will affect each physician -- and each practice -- differently, said Hughes.
First of all, physicians should keep in mind that private payer plans that base physician payment on the Medicare physician fee schedule usually do not use the current fee schedule, said Hughes. Therefore, revenue from patients on private plans -- as well as patients who pay out-of-pocket -- may not be affected.
Family medicine practices should consider what percentage of their revenue comes from Medicare and TRICARE, a federal health insurance plan that covers U.S. military personnel and their families.
Unfortunately, TRICARE pays at 85 percent of the current Medicare fee schedule, so physicians who have patients with this coverage will see significant decreases in pay, said Hughes.
If just 10 percent of a physician's patient panel has Medicare coverage, the cut's effect will be minimal. However "if a family physician specializes in geriatrics, this reduction in pay could have a drastic effect on cash flow," Hughes said.
Physicians Can be Proactive
- Limit the number of Medicare and TRICARE patients with nonurgent concerns seen in your practice each week. Move patients with higher-paying private plans or patients that pay out-of-pocket higher up in the schedule until the current payment crisis is resolved.
- Schedule Medicare patients for preventive services. Get patients into the office who are due for their routine physical exams for which the patient, not Medicare, picks up the tab. Remember, currently, Medicare only covers a patient's initial "Welcome to Medicare" physical.
- Step up the provision of services that provide higher payment. For example, if a physician's training in providing endoscopies or cosmetic procedures is up-to-date, schedule more patients who need or want those services. "Scheduling three patients a day with an ancillary service could generate enough revenue to make up for the Medicare shortfall," said Hughes.
- Call families to schedule back-to-school and sports physicals. Remember, student athletes need their physicals before they start summer training for fall sports such as football and soccer.
Collecting Patient Copays
However, the actual dollar amount difference will be fairly minimal in most situations, said Hughes. To illustrate, she figured the difference in a patient copay for a visit billed as a CPT code 99213 -- family physicians' most commonly billed charge -- using Medicare's national average rate:
The Medicare allowable charge for services rendered to a patient from Jan. 1 to May 31, 2010, was $65.67; Medicare paid $52.54, and the patient paid $13.14. As of June 1, the Medicare allowable charge was $51.68; Medicare will pay $41.34 and the patient would be responsible for $10.34.
In this instance, the physician's Medicare payment is decreased by $11.20, but the difference in the patient coinsurance amount is just $2.80.
Hughes pointed out that Medicare dictates that physicians must collect full copayments from patients, so if the 21.3 percent cut in pay is ultimately reversed, physicians may find they undercollected patient copays.
However, Hughes said that in previous instances where payment rates were in flux, CMS directed physicians that they did not have to bill beneficiaries for additional copay amounts when the amount billed was less than the overall cost of processing and mailing the statement.
Considering Medicare Participation Options
Physicians should know that the deadline for making Medicare participation or nonparticipation decisions for 2010 ended on March 17. No further changes can be made until 2011.
However, physicians may choose to opt out of the Medicare system by becoming private contracting physicians, agreeing to bill patients directly and forgoing any payments from Medicare to their patients or themselves. Physicians who are considering this route can opt out of Medicare 30 days before the first day of the next calendar quarter. Therefore, physicians could begin preparing now to opt out for the fourth quarter of 2010, which begins on Oct. 1.
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