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Release of 2014 CMS physician payment rates prompts AMA call to overhaul SGR
The announcement of new Medicare physician payment rates for 2014 prompted an urgent call from the American Medical Association for Congress to repeal the “broken” payment formula and begin “paving the way for a more stable and innovative Medicare program.”
The reaction followed the release of the 2014 fee schedule and policies by CMS. The AMA said the final Medicare payment rule “serves as an urgent reminder to Congress that there are just 34 days before physicians who care for Medicare patients will face a steep payment cut of about 24% due to the short-sighted, fatally flawed Medicare payment formula — the SGR [Sustainable Growth Rate].”
The CMS announcement said 2014 payment rates will increase for many medical specialties, with some of the largest increases going to providers of mental health services.
The new CMS policies include new recognition of “care that occurs outside of a face-to-face visit” for a range of beneficiaries beginning in 2015. Calling the proposal a “milestone,” CMS said it recognizes “the critical role primary care plays in providing care to beneficiaries with multiple chronic conditions.”
“We believe that successful efforts to improve chronic care management … could improve the quality of care while simultaneously decreasing costs, through reductions in hospitalizations, use of post-acute care services, and emergency department visits,” CMS Principal Deputy Administrator Jonathan Blum said in the announcement.
But AMA reaction to the new fee schedule focused more on what it sees as “real momentum” in Congress for a complete SGR overhaul.
“The timing is right: repealing the SGR formula this year … would cost half as much as last year’s projection,” the AMA statement said. “In fact, if we eliminate the fiscally foolish SGR once and for all it would cost less than all 15 of the previous patches that Congress has put in place over the last decade.”
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Once again, due to the flawed Sustainable Growth Rate methodology, policy dictates an approximate 24% reduction in Medicare reimbursement to physicians.
Many administrators and doctors have become numb to the potential changes due to multiple year last minute repeals. But I think we all suspect it is close to becoming a reality in some form. If there is no repeal or only a partial one, practices must be ready to respond. Those prepared to respond immediately are those with a contingency plan at the ready. Your plan will focus on the two main ways to offset the impact of the reductions, which is to reduce practice expenses and increase revenue.
Additional ways to reduce costs include re-negotiating vendor and payor contracts and delaying new capital expenditures for equipment or office refurbishments.
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These now all-too-familiar annual Chicken Little pronouncements of major fee cuts are two parts malarkey and one part fire drill for the real thing.
If you are an administrator or practice owner, rather than letting this announcement elevate your blood pressure, use it as a reminder to take your prudent business medicine:
Benchmark avidly, at least annual, across all cost centers. Are we over-staffed? Is there a satellite we should have closed long ago? Can lease terms be re-negotiated?
Examine the global cost in your practice to transit a single patient visit…divide total annual expenses (leaving out provider costs, optical, retinal drugs and depreciation) by the number of annual visits including post-operative visits. If the resulting figure is over $100, your practice is vulnerable to future fee cuts — no matter what form they take.
Review your personal finances closely. In particular, avoid debt that you would not be able to carry if you had a 25% or greater cut in your take-home pay. In the event of a major fee cut that sticks, there will be absolute limits on what you can do to preserve your income.
Finally, relax. At least for now. I promise you will see all of this in your rear view mirror by February.