Legislative: Doctors await fate of Medicare cut; small practices at greatest risk

July 1, 2008

The other day, I was visiting with my doctor following my annual checkup, and I asked him about the key concerns that he faces in his regional, three-physician practice in the Baltimore, Md., suburbs.

Key Points

The other day, I was visiting with my doctor following my annual checkup, and I asked him about the key concerns that he faces in his regional, three-physician practice in the Baltimore, Md., suburbs.

"It's the 10.6 percent cut," he says. "That, more than anything else, is killing us."

At press time, Congress still had about a month to step in and say "no" to the reduction in Medicare reimbursement rates before they were scheduled to be implemented, and there were doubts about what would happen.

"We've had this practice for more than 10 years," he tells Dermatology Times, "and we've built it into one of the best in the area. It's taken a lot of dedication and hard work, and we've been doing OK," my doctor says.

Now, however, the cumulative effect of annual efforts to slash Medicare payment rates, the resulting miniscule fee payment updates, and steadily increasing operating costs are taking their toll.

"Used to be, my overhead was about 40 percent of overall revenue," he says. "But now, with the increasing cost of health insurance for my employees and higher costs for everything else it takes to run this practice, overhead is up to 60 percent.

"For the first time, I'm wondering whether I ought to simply join up with some big megapractice. I never thought about doing that before, but I have to tell you, now it's crossed my mind."

That would be a shame, because small practices like his are great - for patients, who get personal attention and have a chance to establish relationships of trust with their doctors, and for the doctors themselves, who have more control over their own practices, without having to answer to corporate bigwigs.

What happens if Congress fails to come to the rescue and that 10.6 percent cut takes effect?

"I don't know how we'll be able to handle it," my doctor says.

"At some point, with costs continuing to go up and income declining, things just won't add up," he says. "At some point, we won't have a choice."

A sympathetic ear

That was the point made during the hearing by representatives of physicians groups - the Medical Association, the American College of Physicians and the American College of Surgeons. And they got a sympathetic ear from committee Chairwoman Nydia M. Velázquez (D-N.Y.).

"Undermining physicians who serve millions of disabled, elderly, veterans and disadvantaged patients makes no sense," she said following the hearing.

"There are enormous gaps in the American healthcare system, and these businesses are helping to fill them. Failing to recognize that fact flies in the face of what is needed," Rep. Velázquez says.

She says cuts to Medicare physician fee payments threaten to undermine the work of these small business medical practices.

"Seniors already have to call dozens of providers, in hopes of finding one who will accept Medicare," Rep. Velázquez says.

"If CMS pushes forward with these cuts, these patients will have even fewer choices. They are the ones who will pay the ultimate price," she says.