Medicare policies take toll on doctors

By Steve Twedt, Pittsburgh Post-Gazette

What’s become an annual game of chicken between Congress and America’s doctors is playing out to its yearly denouement this week.

Unless Congress acts before Tuesday’s deadline, physicians and hospitals will see a 10.6 percent reduction in their Medicare reimbursements. For many Western Pennsylvania medical practices, those cuts would apply to at least half the patients they see. West Penn Allegheny Health System alone would have an estimated $5.3 million reduction in revenue.

If you’re wondering why you haven’t heard more about this, it’s because recent history says Congress will pass the bill and the cuts won’t happen.

But that doesn’t mean there’s no harm.

“Most physicians don’t have a real generous margin to operate with. So you can’t assume that just because it didn’t happen last year and the year before that, Congress is not going to adopt the cuts this year,” said Dr. Melinda Campopiano, who last year gave up her solo family practice and is now affiliated with UPMC.

Uncertainty about Medicare funding “had a significant role in my decision to leave private practice,” she said.

“It’s hard enough to take care of sick people, and try to ensure the good health of healthy people, without having to manage these kind of complexities on the side. And if you misjudge, it potentially means you’re not able to meet the needs of your patients. It’s a very substantial burden.”

For years, this annual dance has unfolded in Washington: Medicare cuts mandated by the Balanced Budget Act of 1997 loom, only to be rescinded at the last minute by Congress.

This year, the House Health Subcommittee on Tuesday approved the Medicare Improvements for Patients and Providers Act, but the Senate rejected it on Thursday, leaving the issue unresolved going into the weekend. If history holds true, there will be another last-minute, hold-your-breath, snatched-from-the-jaws reprieve before Tuesday’s deadline.

But for physicians across Pennsylvania — a state heavily weighted with Medicare patients — the drama takes both an economic and emotional toll. Open enrollment periods for employees typically occur only once a year, as just one example, so budgeting doctors may have to guess in January what will happen to Medicare rates in July.

The prudent course, said Dr. Campopiano, is to plan on the lower reimbursement, but that may mean forgoing equipment purchases, or raises for staff. “It’s particularly hard to forecast for something that’s going to impact multiple years of your budget” such as electronic medical record technology.

On top of that, many private insurers peg their reimbursements to Medicare rates, so even the smallest ripple with Medicare can risk swamping a doctor’s practice.

“This very much plays havoc on the physician’s ability to enact a well thought-out budget for the year,” said Dennis Olmstead, chief economist for the Pennsylvania Medical Society.

“If you just think about running a small business — and most medical practices are small businesses — you’re trying to establish your yearly budget for purchasing equipment for your office, or technology for your office, or payroll to give your employees a raise.

“All these are based on estimates of revenue and expenses, and it’s severely impacted year to year if you’re going to have a Medicare increase or a Medicare decrease.”

Taxpayers get bit, too.

A spokeswoman for the Centers for Medicare and Medicaid said the yearly rate reduction tease means they have to scramble to modify their claims processing system once the cuts are rescinded, then test the system for problems. Time and money get wasted in the process.

“At this point, it will be very costly to make a change,” said the spokeswoman, who said she could only comment on background.

The irony, she added, is that there’s evidence the cuts don’t help much because of a phenomenon she called “behavioral offset” — as rates go down, some physicians increase the number and intensity of procedures they perform to keep their revenues apace.

But certain specialties, such as a family practice, are not procedure driven, so rate reductions are not easily offset.

In parts of the United States, some physicians have opted out of Medicare entirely. That would be a less likely choice in Western Pennsylvania because it would be difficult to maintain a practice when so many patients are Medicare eligible.

But that doesn’t mean there will always be enough doctors.

Mr. Olmstead noted that more than 50 percent of practicing physicians in Pennsylvania were 50 years or older.

“When you continue to get Medicare hits, it makes it easier for physicians to stop seeing patients altogether.”

Steve Twedt can be reached at or 412-263-1963.

First published on June 29, 2008 at 12:00 am

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