Doctors May Exit Medicare Program After Rate Reductions
With the federal government having reduced Medicare physician reimbursement rates this year by 5.4%, doctors warn that Medicare beneficiaries "will feel the pain" if providers choose to cut back services or drop out of the program altogether, the Wall Street Journal reports. According to the Journal, the reduced reimbursement rates "underscore the strain that an aging population, rising demand for health care and new medical technology is placing on the system." Physicians who treat Medicare beneficiaries "are finding themselves pinched," and even those who treat patients with private insurance may "feel the sting" of reduced Medicare reimbursements, since many private health insurers use Medicare rates to determine their payments. In addition, the Journal reports that the reduced reimbursement rates could lead to a "decline in the supply of physicians" in the United States by discouraging people from entering the field. According to the Association of American Medical Colleges, medical school applications have dropped 26% over the past five years. Medicare officials "say they have no choice but to follow" a formula approved by Congress in 1997 to determine physician reimbursement rates, which is based in part on changes to the nation's gross domestic product. "There is no wiggle room," CMS Administrator Tom Scully said. From 1998 to 2001, CMS reports that the formula "actually worked in physicians' favor," resulting in a 16% increase in reimbursement rates for the period, "well above" the rate of inflation. But the economic slowdown this year reversed that trend.
The American Medical Association last year "fought fiercely" to block the reduction in Medicare physician reimbursement rates, which the group predicts will amount to $7 billion in lost payments to doctors. According to the AMA, physician reimbursement rates have only increased 18.5% in the past 10 years, or an average of 1.1% per year, "far behind the skyrocketing rise" in the price of medical liability insurance and other costs. "Physicians are getting to a point where they cannot afford to accept new Medicare patients," D. Ted Lewers, a member of the AMA board of trustees, said. However, the Journal reports that doctors "have been threatening for years" to leave Medicare as a result of "insufficient payments," adding that a "mass exodus isn't likely now." Medicare beneficiaries represent a "huge chunk of the health care market that few doctors can afford to ignore," the Journal reports. "Doctors don't change very quickly, and in a sense, Medicare patients are very important to doctors' practices," Paul Ginsburg, president of the Center for Studying Health System Change, said. Ginsburg predicts that some physicians will "wait to see if some fees are restored" in 2003 before they decide to exit Medicare (Martinez, Wall Street Journal, 1/15).