Ken’s Take:
For the record: I’m totally against “bending the cost curve” by cutting doctors pay !
The press reports — and my doctor friends confirm — that Medicare reimbursement rates are 15% to 25% below the prices paid by private insurance companies for comparable services.
In many (most?) instances, the Medicare reimbursements are below the doctors’ fully loaded costs. Said differently — doctors often (usually ?) lose money on Medicare patients.
As a result, popular doctors (i.e. good ones who have an earned reputation and a “full panel” of patients) restrict the number of Medicare patients they treat — sometimes simply refusing to accept Medicare patients at all. Only newbies and unpopular doctors who have excess “capacity” smack their lips when they see Medicare patients coming through the door. To these doctors, Medicare is to healthcare as Priceline is to airlines — a way to generate some revenue off a perishable asset — the doctor’s available time -to-treat.
To give the appearance of controlling runaway Medicare costs, Congress put bills in place that automatically cut Medicare reimbursement rates from year to year. Under current law, doctors face a 21.5 percent cut in Medicare fees in 2010 and then annual 5 percent cuts for several years.
Recognizing that lower rates would just decrease the number of doctors seeing Medicare patients, Congress has gotten in the habit of overriding the cuts each year — sometimes increasing them. (Note: I think that’s a good thing).
The healthcare reform legislation is supposed to fix the problem by at least freezing reimbursement rates for an extended period (maybe forever). This “sweetener” is what got the AMA to buy in and publicly support ObamaCare.
The problem: the freeze costs about $25 billion annually — or about $250 billion over 10 years. That’s an amount that pushes ObamaCare costs over $1 trillion (for 10 years) — that seems to be a number that everybody gags on.
So, Reid tried to outboard the freeze from the healthcare package and pass it as a run of the mill deficit spending program to be enacted immediately.
To Reid’s surprise, some Dems got uneasy with the ploy and voted against it.
So, either the freeze gets put into ObamaCare, bloating its cost — or reimbursement rates go down, understandably angering the AMA — or Congress punts the issue as a post-reform clean-up matter.
I’m betting on the latter.
P.S. I’m also betting that ObamaCare will have provisions mandating that doctors treat some minimum number of Medicare patients — even if the reimbursement rates are below cost. Just watch …
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Here are a couple of links with details on Reid’s failed gambit.
The Hill, Miscalculation delivers loss on Medicare doc fix for Majority Leader Reid, Oct. 21 2009
http://thehill.com/homenews/senate/64221-miscalculation-delivers-loss-for-reid-on-doc-fix
WSJ, Temporary Beltway Sanity – The doctor fix blows up in the Senate, no thanks to the AMA. Oct. 22, 2009
http://online.wsj.com/article/SB10001424052748704597704574487622368301370.html
The Homa Files 