Health care providers are anxiously waiting to see if they will see their Medicare reimbursement rates cut by more than 28 percent in 2013.
Physicians face a 26.5 percent cut in what’s called the sustainable growth rate – used to reimburse providers for services delivered to Medicare recipients – if Congress doesn’t adjust the formula by Tuesday.
Meanwhile, hospitals and physicians also face reductions of 2 percent in Medicare reimbursement rates as part of sequestration. Those cuts go into effect if Congress and President Obama don’t strike a deal on the “fiscal cliff” by Tuesday.
The sustainable growth rate formula is not a new issue, said Jon Rosell, executive director of the Medical Society of Sedgwick County.
“Physicians have struggled with it for years because Congress failed to enact a permanent solution to solve the problem,” Rosell said. “It makes it difficult to be business partners with the federal government when these acts continue to occur.”
The sustainable growth rate was instituted as part of the Balanced Budget Act of 1997, and cuts to the rate started to become a possibility in 2002 because Medicare costs started exceeding the targets for expenses.
But over the last decade, until now, Washington continually acted to stave off reductions in payments to providers.
The American Academy of Family Physicians recently estimated that the cuts could result in a loss of about $27,000 for the average family physician or about $80,000 for a three-physician practice, according to the academy’s website.
The sustainable growth rate formula used by the Centers for Medicare and Medicaid Services to calculate payments to physicians is based on varied criteria that include the gross domestic product, estimated changes in fees for services and the number of beneficiaries enrolled in Medicare. As the years have gone by, the taxpayer costs of freezing the formula so there would be no cuts in rates continued to rise.
At this point, the temporary funding patch – called “Doc Fix” – is estimated to cost the federal government about $25 billion a year, according to the Congressional Budget Office.
Such temporary funding fixes have been adopted and applied retroactively before, and that could happen again this time.
But even that delays payments from Medicare to physicians and creates a cash flow problem, said Kevin Hoppock, past president of the Kansas Medical Society and a family practice physician at Via Christi Clinic.
“Most of us consider it to be a privilege to care for senior citizens, though it’s not a highly profitable population to care for,” Hoppock said. “A 26 percent cut from current rates would make an unsustainable situation. Many doctors would respond by closing their doors to Medicare patients.”
Jay Gilbaugh, a urologist with Wichita Urology Group and second vice president of the Kansas Medical Society, thinks that this year, Congress will patch the problem again, likely retroactively after Jan. 1.
Gilbaugh has met with members of Congress at least six times in the last several years to discuss options to fix the sustainable growth rate formula, he said.
“They’re basically just putting Band-Aids on it,” Gilbaugh said. “It mirrors everything else in terms of federal spending. These are not easy solutions. They have other priorities like entitlements and defense.”
Gilbaugh said about 47 percent of his practice’s patients are Medicare recipients.
“The physician community is pretty unanimous in the need for a permanent … fix,” Gilbaugh said. “It was a bad idea from the start. The flaws were pointed out early on but nobody had the political will to fix it because of the cost.”
Contributing: Associated Press