What Will Doctors Cut If Their Medicare Payments Are Reduced by 27 Percent?

CMS has just announced the Physician Fee Schedule rates for 2013, implementing a 26.5 percent rate reduction required under the sustainable growth rate (SGR) formula. In each of the last ten years, Congress has overridden the cuts required under the SGR without changing the statutory formula, so that large cuts are threatened for the following year.

A study by the Medical Group Management Association (MGMA) asked what doctors would do if a projected 27 percent reduction is implemented. The responses came from 1,000 groups in which 26,000 physicians practice medicine. Seventy-two percent of physicians surveyed said they would be somewhat likely or very likely to reduce the number of appointments for new Medicare patients. In addition, 58 percent said they would be very likely or somewhat likely to stop accepting new Medicare patients altogether, and 26 percent of respondents said they would be likely or somewhat likely to stop treating any Medicare patients at all, new or established. These are some of the more dramatic cuts that doctors said they would make if the 27 percent reduction is allowed to be implemented.

Salaries and benefits would be reduced by 76 percent of the physicians surveyed, and 65 percent indicated they would reduce the number of administrative support staff. To save money, 58 percent of physicians said they might reduce the number of clinical staff. The same percentage said they might delay the purchase of new clinical equipment or updates to their facilities. Fifty-seven percent said they would reduce the amount of charity care they provide.

Cuts already made

The MGMA survey indicated that 60 percent of physicians already have delayed purchasing new clinical equipment or delayed updates to their facilities due to the instability of the Medicare physician payment system. The instability comes from never knowing whether a large cut is actually going to happen. Sixty percent of the physicians surveyed said they have reduced staff salaries and benefits, while 36 percent said they have reduced clinical staff.

Interestingly,40 percent of physicians said they would be looking for alternate sources of revenue if the 27 percent cut went into place, and 34 percent said they already have expanded revenue from non-Medicare sources over the last 10 years.

New payment models

The physicians surveyed said they would welcome a new Medicare payment model as long as it provided stability for a five-year period. The MGMA survey said that 72 percent of physicians would be somewhat likely or much more likely to participate in a new Medicare payment and service delivery model if they felt that there would be stability in their payment system for five years.

Currently less than 18 percent of physicians are participating in the numerous CMS demonstration programs testing new payment and care delivery models. The physicians state that lack of payment predictability, 54 percent, and onerous program regulations, 52 percent, prevent their practices from participating in  these demonstrations. Many, 52 percent, feel that the demonstrations aren’t relevant or accessible to their practices, while 40 percent say the start-up costs prohibit them from participating in these demonstration projects.