Double-Digit Medicare Cuts Await Doctors July 1

June 16, 2008
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GRAND RAPIDS — The clock is ticking on an average 10.6 percent cut in Medicare payments to doctors, which is poised to go into effect July 1.

For the past several years, Congress has eventually stayed the hovering Medicare ax. U.S. Sen. Max Baucus, D-Montana, and chairman of the Senate Finance Committee, has introduced a bill that does just that, providing for a 1.1 percent increase plus incentives for doctors who use electronic prescribing. The bill also tightens the screws on Medicare Advantage programs, a measure that has prompted White House promises of a veto and a competing bill from Republicans.

As Washington fiddles, West Michigan health care providers are keeping cautious eyes on their bottom lines.

At Grand Rapids Ophthalmology, Executive Director Bob Wolford said 60 percent of his group’s business in eye conditions is Medicare. “If this cut were allowed to stand, that would be devastating,” he said.

The cut would cost GRO the equivalent of 20 jobs, Wolford said, or up to 30 if commercial insurers were to follow Medicare’s lead. “How can we possibly take care of people, losing 30 employees? It’s just impossible,” he said.

Scott Harring, CFO for Michigan Medical PC, said the closer to the election it gets, the less likely Congress will enact a patch.

“From our standpoint, probably somewhere between 35 percent and 40 percent of our revenue comes from Medicare,” Harring said. The cut could cost MMPC $3 million to $4 million.

“Adult medicine already has a shortage of physicians,” he said, and more doctors in the community might decide to drop out of Medicare altogether with the planned cut. The impact would mean some belt-tightening at MMPC, the largest physicians’ practice in West Michigan.

“We’d have to look at efficiencies, those types of things,” Harring said. “There’s nothing planned. We’re trying not to react to something that hasn’t occurred yet.”

All three Grand Rapids hospitals employ physicians, but the Medicare cuts do not apply to reimbursements for hospital care.

“Any impact on reimbursement is a concern, but it is an annual thing,” Tim Susterich, CFO at Metro Health.

“Any reduction in Medicare reimbursement is problematic. It’s just less money coming in,” added Saint Mary’s Health Care Vice President Micki Benz.

Wolford, who has been active with professional organizations in lobbying lawmakers, said he thinks Congress pays too much attention to physician reimbursement.

“Medicare only has this issue with physician reimbursement,” he said. “They don’t do it to hospitals or facilities; this issue only applies to doctors. You have to look at that and say how is that fair?”

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