Issue: June 2006

June 01, 2006

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What does dropping out as a Medicare provider mean?

Surgeons should consider more than just the immediate financial impact of leaving the national health program.

Issue: June 2006

The progressive erosion of Medicare payments vs. increasing overhead has given new life to the question of opting in or out of the Medicare program. Surveys performed by the North American Spine Society (NASS) in 2001 and again in 2002 suggest that an increasing number of NASS members are opting out of Medicare or restricting access of Medicare patients to their practices. An American Medical Association survey revealed similar findings.

Helping us explore options and issues in this virtual round table are three orthopedic surgeons, including one who has opted out of the Medicare program (Dr. Abraham Rogozinski) and another who remains in the program (Dr. David Lewallen).

Dr. Tom Faciszewski, who is the NASS second vice president, will explain the particulars of the NASS surveys and data from an economic analysis performed at the Marshfield Clinic in Wisconsin.

David A. Wong, MD, MSc, FRCS(C)
Moderator

Participants
Moderator David A. Wong, MD, MSc, FRCS (C) Past President, North American Spine Society (NASS); Co-Chair, NASS Pay for Performance Task Force; Member, Orthopedics Today Editorial Board; Orthopedic Surgeon, Denver Spine, Denver	David G. Lewallen, MD Chair, Division of Adult Reconstructive Surgery; Department of Orthopedic Surgery; Mayo Clinic, Rochester, Minn.
Tom Faciszewski, MD Second Vice President, NASS; Chairman, Department of Orthopedic Spine Surgery; Marshfield Clinic, Marshfield, Wis.	Abraham Rogozinski, MD Orthopedic Surgeon, Rogozinski Orthopedic Clinic, Jacksonville, Fla.

David A. Wong, MD, MSc, FRCS(C): Dr. Rogozinski, your group decided to opt out of the Medicare system. What were the overriding factors that led you to opt out?

Abraham Rogozinski, MD: Our clinic’s decision to opt out of Medicare in 2002 was based on multiple factors. The two overriding issues were the declining reimbursements coupled with growing regulatory hurdles. We enjoyed taking care of our elderly Medicare patients, but they represent a group who is generally sicker and require more time and attention to care for.

We found that Medicare’s complex reporting requirements created a competition for our time spent filling forms and worrying about complying with burdensome regulatory matters, as well as having the necessary face time that these complex patients required. This situation, when coupled with a reimbursement formula that mandated a series of payment cuts in the face of escalating overhead expenses and skyrocketing medical malpractice liability insurance premiums, made for an unsustainable economic situation.

Secondary factors that were considered included slow payment and arbitrary coding decisions, which negatively impacted our submissions. We found ourselves involved in numerous refilings and appeals that we ultimately won, but at a significant investment in time and effort. This was further exacerbated by the constant fear of retaliation or accusations of inadvertent fraud for even accidental mistakes in filing these complicated forms.

Furthermore, the current system undermines the patient/physician relationship and promotes an antagonistic environment in which the patient becomes the citizen-posse looking to report his doctors who are presumed guilty.

It came to our attention that a toll-free fraud hotline had appeared on the patients’ Explanation of Benefits (EOB) returned to them. This set up an opportunity for patients to claim fraud since they did not understand their EOBs, and gave them an excuse not to pay their copay balance.

“The current system undermines the patient/physician relationship and promotes an antagonistic environment.”
— Abraham Rogozinski, MD

Wong: Dr. Lewallen, can you relate the issues that you considered in the decision to remain opted in?

David G. Lewallen, MD: Decision making at Mayo Clinic is made collectively on behalf of individual physicians by its board and committees, which are physician-led. So this was a group decision, not one available to me as an individual, yet I strongly agree with the decision to stay opted in.

The Mayo Clinic is a tertiary referral institution dedicated to serving the needs of the communities and region around it, as well as national and international patients who seek care at our facilities. Even though the current health care system, including Medicare, is broken and will not endure, opting out of Medicare is not a viable option at this time for major full service tertiary referral centers such as ours. This would deny critical, often lifesaving services to individual patients not available elsewhere. Patients should not be made to suffer due to the lack of a functioning health care system in this country.

We have chosen to continue to try to do the best we can to provide care in a flawed “nonsystem” with misaligned incentives and large numbers of uninsured, while participating as actively as possible in the discussion of comprehensive health care reform. Examples of the role I believe institutions such as Mayo can play include the Mayo National Symposium on Health Care Reform held in May this year in Rochester, Minn., which brought together public, private and governmental experts and decision makers to chart a course for real and imminent change.

All of us — patients, providers, health care institutions, the business sector and government — must come together to address long-term solutions in order to prevent the implosion of the current system, which will otherwise occur during our careers or, even worse, our retirement years when we are most vulnerable and need it the most.

Wong: Dr. Faciszewski, what did the Marshfield Clinic study of Medicare reimbursement show?

Tom Faciszewski, MD: In 2000, the Marshfield Clinic initiated an internal analysis of its ability to recover Medicare Allowable Costs for providing Medicare services to patients at the clinic. To calculate the percentage of allowed costs for which Medicare reimbursement is received, Marshfield Clinic accountants eliminated all expenses and revenues that might potentially be questioned by the Medicare program. We followed accounting principles similar to those used in our annual FQHC cost report previously audited by external auditors and submitted to the state.

The Marshfield Clinic Cost Analysis, which is publicly audited by KPMG and the State of Wisconsin, demonstrated that the Clinic recovered 71.5% of its Medicare Allowable Costs in FY 2000. In FY 2001 the Clinic recovered 70.6%; in FY 2002, 67.7%; in FY 2003, 63.85%; in FY 2004, 63.46%; in FY 2005, 61.06%.

Marshfield Clinic has compiled substantial data and cost analysis since 2000 to understand and demonstrate the inaccuracy of Medicare measures of cost. Medicare’s physician fee schedule, which specifies the amount that Medicare will pay for each physician service, includes adjustments to help ensure that the fees paid in a geographic area appropriately reflect the cost of living in that area and the costs associated with the operation of a medical practice.

Because of Medicare reimbursement shortfalls, the Clinic has also undertaken studies to determine whether Medicare policies are fair and equitable. The March 2004 MEDPAC Report to Congress included the results of a study conducted by Chris Hogan that compared Medicare payment rates with private payer rates. Hogan’s study demonstrated that nationwide Medicare rates were 83% of private rates in 2001, and 81% in 2003. (P. 111-112). In contrast, for Marshfield Clinic in 2002 Medicare revenue was 46.6% of fully discounted private payer rates. In 2003 Medicare revenue fell to 39.6% of private payer rates, fully discounted. These findings indicate that Medicare payment rates in our Wisconsin service area are out of sync with the rest of the country. Similar discrepancies likely exist elsewhere. To this end, the geographic adjustment is a critical component of the physician payment system. Based upon our data we believe that there is reason to be concerned about the accuracy of the geographic adjustments and that payment errors in the Medicare program are in part related to and a function of the miscalculation of relative physician resource cost differences among geographic areas compared to the national average.

Wong: Dr. Rogozinski, what effects has opting out had on your practice?

Rogozinski: Opting out of Medicare has had both positive and negative effects on our practice. On the positive side, we have been able to schedule our other patients into available slots with less waiting time. We were anticipating a drop in our patient load, but this never was realized since we had no way of knowing the significant number of patients that were being turned away or were unwilling to wait a prolonged period of time due to scheduling conflicts. Having this responsiveness to quickly accommodate these patients previously not captured has allowed us to see an improvement in the overall mix of higher paying patients, while at the same time, these patients greatly appreciate our ability to see them expeditiously for their orthopedic concerns.

The negative effect has been that we are no longer able to care for these wonderful elderly patients. We loved taking care of this great generation of patients. We are not happy about the decision we had to make and its effect of reducing these patients’ access to doctors that they want and prefer to see since they have developed a relationship and trust in us. It is a frustrating situation to have to explain to my parents’ friends why we cannot see them. Rather than have these encounters end up in a negative manner or brush them off, we try to educate them about the issues that lead to this conundrum and provide them with contacts in Washington so that they can voice their complaints about their dissatisfaction with this situation that leaves all concerned parties unhappy with their options.

Wong: Dr. Faciszewski, what did the NASS member survey on access to care for Medicare patients show?

Faciszewski: In 2001, the NASS member survey revealed that 34% of spine care professionals were limiting access for Medicare patients and 46% of members limited access to Medicaid patients. When asked what the most burdensome part of Medicare was, 88% cited poor reimbursement. The following year, CMS reduced physician payments by 5.4%. This survey was repeated in 2002 and 49% of NASS members said they were limiting access to Medicare patients. The latest figure is from a 2003 survey, which revealed that the number of NASS members limiting their participation in the Medicare program had increased to 52%.

This pattern of restriction of access to care for Medicare patients is not unique to spine care professionals. The Medical Group Management Association reports that 52% of physician groups are limiting their participation in the Medicare program.

Wong: Dr. Lewellan, even though the Mayo Clinic physicians remain opted in, I understand that some limitations have been put on access. Can you enlighten us on the reasoning for this decision?

Lewellan: We continue to experience much greater demand for access to care than we can provide. Thus, some system of prioritization is required, as we do not have the personnel and physical facilities to see everyone wishing to be seen or cared for. We have chosen to attempt to see those we can help the most.

In my practice, I see the uninsured, those with a variety of insurance situations, and Medicare, and Medicaid patients, and generally I am unaware of their situation. I concentrate on what I know, which is the orthopedic aspects of their care. Decisions on access to my appointment calendar are made with my review based on the nature of the problem and urgency of needed treatment. Thus, Medicare patients, like other patients, will experience longer delays in gaining access if they do not have a significant active major medical problem, when compared to someone with a newly diagnosed complicated problem or in need of a complex procedure that is unavailable at home.

Medicare patients and others, needing only outpatient health maintenance and screening visits are probably best managed in most cases by their local physicians anyway.

“Medicare patients and others, needing only outpatient health maintenance and screening visits are probably best managed in most cases by their local physicians anyway.”
— David G. Lewellan, MD

Wong: Dr. Faciszewski, what is your Medicare status at the Marshfield Clinic and how did your survey effect the decision?

Faciszewski: In spite of Medicare’s dismal reimbursement rates, Marshfield Clinic’s proactive participation in the Medicare program is consistent with the not-for-profit status and the charitable mission of the clinic to serve patients through accessible, high-quality health care, research and education. In part, as a result of Medicare’s poor payment, the clinic has aggressively sought opportunities to engage CMS, Congress and the Medicare Payment Advisory Commission with the objective of steering federal reimbursement policy to reward quality and efficiency in health care. As shrinking profit margins threaten Marshfield Clinic’s fiscal viability, the proposed 4.6% reduction in physician payments for 2007 threatens our continued participation in the Medicare system.

Wong: Dr. Lewallen, are you happy with the decision to remain opted in?

Lewallen: Not happy but committed, concerned and hopeful that as a society we can come together to craft a system of health care that is safe, effective, efficient and patient-centered. We have a long way to go, but I believe this can and will be achieved. In the meantime, we will continue to do our best to take care of the patients.

Wong: Dr. Rogozinski, are you content with your decision to opt out?

Rogozinski: Overall, yes, but it has been a bittersweet decision. It has been a prudent business decision, but I do not see this as any type of long-term “fix.” Our elderly Medicare patients deserve the choice to seek the best care available provided by the doctors they want to see. The reduced access that my decision has created does not improve the overall situation and makes me think about the future when I become a senior citizen looking to find good care.

Wong: Thank you to our three panelists. There were several key points brought out in this discussion to consider:

Opting out of Medicare is an option and may have positive effects on the business side of practice.
Present Medicare payments do not appear to cover the actual costs of patient services.
Physicians and institutions that are involved in graduate medical education, are traditional tertiary care providers and/or are members of multispecialty clinics are more likely to remain opted in to the Medicare system.
Opting out of Medicare is not a long-term fix for the basic underlying problem of equitable reimbursement for medical services provided to our Medicare patients.

Next month, Part 2 of this round table will explore Medicare concerns from the health policy perspective and will include representatives from Congress, the Center for Medicare and Medicaid Services, and the American Association of Orthopedic Surgeons (AAOS C6), the advocacy arm of the AAOS.