When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.
The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.
Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.
One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)
Don’t Be Too Smug
There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.
Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”
In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.