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Medicare Stalemate: 4 Ways This Year's SGR Payment Cut Would Hurt Healthcare

The sustainable growth rate formula for Medicare physician payment rates has brought the U.S. healthcare system to its knees for the past several years. As physicians face yet another rate reduction this January, the formula is causing many within the profession to question their medicine business practices.

Physicians face a 27 percent cut to their Medicare reimbursement rates on Jan. 1, 2013, due to the SGR unless Congress passes a temporary fix or permanent solution.

MGMA-ACMPE recently released survey results from its Legislative and Executive Advocacy Response Network. Roughly 26,000 physicians from 1,000 practices participated in the survey, which covered how the SGR and other Medicare policies are impacting their practices. Here are some of the highlights from the survey:

1. Payment uncertainty leads to physicians cutting costs. The uncertainty surrounding the SGR has caused physician practices to make drastic changes around their practices, mostly involving cost-cutting measures. The most common business decisions related to the SGR have been the delay of new clinical equipment purchases (60 percent), reducing staff salaries and/or benefits (60 percent), cutting charity care (45 percent) and reducing administrative staff members (45 percent).

2. If the SGR is not patched temporarily and permanently this year, cost-cutting measures will be expanded. If physicians have to bear a 27 percent cut to Medicare rates this January, 76 percent said they would reduce staff salaries and/or benefits. The reduction of administration staff, clinical staff and charity care will also be more common among more physician practices, and 24 percent said they would consider closing satellite offices.

3. Medicare patients would be affected by the SGR, too. If Congress does not avert this year's payment cut, 31 percent of physicians said it would be "very likely" they would stop accepting new Medicare patients. Forty-five percent said they would "very likely" reduce the number of appointments for new Medicare patients. Roughly 27 percent of physicians said they would "somewhat likely" or "very likely" cease treating all Medicare patients, but 37 percent said it's "very unlikely" they would stop treating all Medicare patients.

4. The SGR hinders the adoption of new Medicare approaches. Roughly 54 percent of responding physicians said the lack of payment predictability due to the looming 27 percent cut is a major barrier to participating in new Medicare payment and delivery models.

More Articles on the Sustainable Growth Rate:

SGR Update: How Much is the Repeal Cost for 2012?

SGR Not Included in Temporary Government Funding Resolution

Rep. Dr. Michael Burgess Proposes 1-Year Extension of SGR

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