Doctors’ offices may go under the knife when Medicare reimbursements take a 10 percent cut—unless Congress intervenes again

By Erin Frustaci

There once was a time when at the first sign of an illness, whether it be a cough, sore throat or fever, a person would dial the family doc to schedule a quick appointment.

There wasn’t the hassle or the waiting or the fighting with insurance companies. A lot has changed. As the costs of health care continue to skyrocket, patients are not the only ones faced with heavy burdens related to premiums, co-pays and deductibles.

This time of year, physicians anxiously wait as the Jan. 1 deadline creeps closer: the big day when physicians’ Medicare reimbursements will take a near 10 percent cut, unless Congress takes action.

It spurs a feeling of déjà vu for many in the medical field. Nearly every year there is a projected cut to Medicare reimbursements, which is calculated based on a sustainable growth rate, and nearly every year Congress votes to override the cut at the last minute. Last year, there was a projected 5 percent cut, which Congress did override.

“It’s a creature of Congress,� said Mike Fierberg, public affairs specialist for Centers for Medicare and Medicaid Services. “In essence, we dig ourselves a deeper hole.�

Even though there are thriving medical practices out there, some doctors’ offices do face the same challenges as other small businesses. Many physicians even say such a cut could force primary doctors to limit the number of Medicare patients they see or, worse, force them to close their practice completely. Currently, there is no requirement for doctors to see a certain number of new Medicare patients, and access could become much tighter with the potential cut.

Dr. John Bender, Larimer County Medical Society president and medical director of Miramont Family Practice in Fort Collins, said 16 practices have closed since 2001, some due to bankruptcy and some due to early retirement. There are no longer any solo practices in the city and 139 primary care providers—the same amount as in 2001 despite growth.

While doctors are rarely thought of as impoverished, Bender would argue that small primary care practices are going in the same direction as the family farmer.

“Internal medicine is a dying breed,â€? he said. “I don’t think most people think of doctors as poor. … But you can’t just open practice and expect to make money.â€?

Fierberg said the issue is more critical in rural areas, where there are fewer primary care doctors to choose from. This could be part of the reason that many Fort Collins practices see patients from many of the surrounding communities. Bender expects about one-third of his patients come from outside city limits.

“It’s a chronic problem, which is why our leadership says a total restructuring in the way we pay physicians for services is needed,� Fierberg said.

Part of their problem is that the physician’s Medicare reimbursement is at a fixed rate—and doesn’t factor in expenses. Meanwhile, property taxes increase as well as the cost of fuel and operating costs. Doctors are faced with a decision: They can either work harder and try to see more patients in the same amount of time, give patients’ visits the same length of time and work more hours or try to cut overhead costs.

“People get to be 50 and retire,� Bender said. “Docs used to do that when they turned 65, not 50. They realize, I’m making less money, working harder and my practice is worth less every year.�

James Bush, M.D., faced a very similar scenario in March of this year when he decided to close his internal medicine practice after 24 years. Bush had been very involved in the medical community for a number of years, serving as the chief of staff at Poudre Valley Hospital and in different roles in a variety of societies and organizations. He decided to leave his practice for a number of reasons but said the Medicare reimbursement plan had a lot to do with it.

“It became clear after five years that Congress lacked the will to fix the sustainable growth formula,â€? he said. “I wasn’t in a desperate situation, but I could see the writing on the wall. … Things weren’t getting better and I couldn’t seem to influence things on a local level.â€?

Bush took a job at the state level as the Medicaid Medical Director for Wyoming. He hated leaving his patients, but realized he wouldn’t be much help to them if the provider situation didn’t improve. Through his new position, he is working on a model called The Patient Centered Medical Home, which reforms the payment structure to compensate health care providers for work that goes overlooked. The plan is being rolled out in stages and Bush hopes it will eventually gain enough momentum to be introduced in other states and then transfer over as a Medicare program. Though the plan doesn’t fix everything immediately, Bush sees it as a good start.

“The problem doesn’t lead to a single bumper sticker solution,� Bush said. “Health care is way to complex for that.�

One such complexity is the fact that medical students, who grapple with thousands of dollars of student loans when they finish school, are not choosing to go into internal medicine—opting to go with specialty medicine instead.

Many patients, especially many of those of the older population, prefer private offices where they can see the same doctor every time. But, the industry is becoming more fragmented; there are a lot more specialists now. Bush said that without a balance of both specialists and primary care physicians, the system is not as strong and that the old model of medicine that everyone grew up with will be gone.

“It’s not an either or scenario,� he said. “There needs to be a strong backbone.�

Another trend the region is experiencing is that marketplace consolidation is becoming more common. Many physicians who can no longer make it on their own are joining up with medical groups. Big Thompson Medical Group now has 56 providers within 15 clinics that are located between Berthoud and Fort Collins.

Peter McNally, CEO of Big Thompson Medical Group, said by being under the umbrella of Banner Health has reduced the threats that come with the Medicare reimbursement cuts. He said being a part of a larger organization allowed the group to negotiate accordingly.

“From our group perspective, with the Medicare cuts, had we been an independent primary care physician network, we would probably be looking at some struggling,� he said. “Luckily, we have Banner Health to fall back on. It works with us to keep our practices running.�

McNally said that he has received very positive feedback from all of the physicians within the group. He also said he frequently receives calls from other physicians who are looking to join a health care organization where they can maintain their autonomy but yet still have a greater support system behind them in case there are major cuts to reimbursements. At this point though, only time will tell what lies ahead for primary care physicians.

“The system isn’t at breakdown yet; it hasn’t fallen yet, but it keeps dangling,� Bush said. “They are running out of time. If they don’t do something, it will be way too late.�
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