Thursday, August 07, 2008

The Beginning of the Middle of the End of Medicare

The Beginning of the End of Medicare was when Congress passed the rules which require physician fees to follow a Sustainable Growth Rate or SGR,  followed by the Medicare Modernization Act or MMA, which added the prescription drug plan but prevents Medicare from negotiating lower rates from Big Pharma.  The problem with the SGR is that its calculation is fatally flawed, requiring increasing annual reductions in physician payments.  Congress recently overrode Bush's veto of their bill to nullify this year's planned SGR reduction of 10% in provider payments.  There is another 40% reduction planned over the next several years.  Since all other costs go up annually, it is a no-brainer that annual reductions in Medicare fees will eventually result in providers ending their participation in the medicare program.

We are now at the Middle of the End.  Medicare now has this bounty hunter system using "recovery audit contractors", where auditors look for "overpayments" and errors.  There has been criticism, though, about inconsistent methods and a lack of oversight of the auditors.

But for physicians who come under the gaze of the contractors, the costs to the practice can be far more than the Medicare money at stake.

Marilou Terpenning, MD, a hematologist-oncologist in Santa Monica, Calif., had to respond to several rounds of medical record requests from PRG Schultz for claims involving alleged overpayment for chemotherapy. Some of the cited overpayments were as little as $13 or so per claim, but the cost to the practice of retrieving the corresponding record and forwarding the information could be 10 times that amount, she said.
I suspect that this is part of Medicare's death by a thousand cuts.  The hassle factor for dealing with Medicare will exponentially increase to the point that few participating providers will be left standing.

(It was raining all morning, so I decided to write a relevant post :-)