Wednesday, April 02, 2008

No Answers in Washington

Those concerned about the prospects of entitlement reform related to Social Security and Medicare programs that everyone who has done the math knows face severe shortfalls in the coming decades cannot be encouraged by the inability of Congress to deal with even the most immediate of concerns. Take for instance, physician reimbursement for treating Medicare patients.

Medicare reimburses medical providers in accordance with a medical fee schedule. Several years ago, Congress, in its less than infinite wisdom, dictated that annual changes in Medicare reimbursement would be based on a financial calculation related to the federal budget. This meant that reimbursement adjustments would NOT be related to physician costs or to the rate of medical inflation. Rather, they would be a purely unrelated financial calculation.

Unfortunately, the formula was flawed, and beginning in 2003, the application of the formula would have meant decreases in the already low Medicare reimbursement for physicians. Rather than legislate a solution that would remedy the problem, Congress has annually passed a series of one year fixes, with the result that each year the impending decrease in reimbursement has been higher. Doctors now are facing a potential fee reduction of over 10%, and many are saying that under that scenario they would no longer make enough money to enable them to see Medicare patients.

In addition, a dramatic decrease will affect other payment systems. Group health managed care contracts frequently use Medicare reimbursement as a benchmark. State workers' compensation fee schedules often also use the Medicare fee schedule in this way, though most of those have found different ways of updating their rates.

Once again, if you are looking for reasonable, long term solutions to real problems, don't expect the federal government to provide them.

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