I am finding it more difficult to dismiss the doom and gloom crowd in regards to the latest impending emergency healthcare crisis.
Physicians of all specialties can expect Medicare payment rate decreases of 5% per year, beginning in 2006 and continuing until 2013, creating a decrease in excess of 30% by the end of this period.
As the focus of my experience is in emergency medicine, I will only provide my analysis of the effects of the impending cuts on that aspect of medical care.
In a normal emergency department, approximately 20% of the patient volume is comprised of Medicare recipients. This percentage is significantly higher in areas with larger Medicare populations (Florida, New York, California and Arizona). While a cut to payments for 20% of the patient population may not seem to be a catastrophic loss, it must be taken into account the effect these cuts will have on reimbursement for the remaining 80% of the patient volume.
Managed Care Patients Affected
Many managed care insurance carriers (Aetna US Healthcare, United Healthcare, Cigna, Oxford, Humana, etc) base their reimbursement rates on a percentage of the Medicare rates. These percentages will vary by market and negotiations on behalf of the physicians, but generally run between 110% and 160% of the Medicare rates. It must be understood that, unlike the Medicare program, participation in these plans in normally voluntary for emergency physicians.
While voluntary in the technical sense, participation is a way of life for emergency providers because of the tactics employed by these payers. Because only a handful of states have enacted mandatory assignment laws (laws designed to force insurance carriers to pay physician fees directly to the provider as opposed to paying the patient), many carriers will pay non-participating provider’s claims to the patient, forcing the physicians (or their billing agents) to exhaust valuable resources in chasing the payment down from the patient.
What all this means is that, the cuts in Medicare payment rates will also result in drops in payments by managed care plans. This would normally account for an additional 20-25% of the patient volume in an average hospital emergency department, bringing the total impacted patient base to 40-45%.
Other Payers Impacted
Along with the hits to the Medicare and managed care patient base, emergency providers will also see reductions in other government and regulatory payer payments. Among those would be claims for recipients of Tricare (Champus), which is the benefit plan for retired military personnel and their families. Champus payments are based on the Medicare fee schedule and will be cut as well. Unlike managed care plans, emergency physicians will not opt out of Champus participation, as this would mean no payment at all.
It is also quite possible that many states will follow the Medicare fee reductions and reduce fee schedules for the state run Medicaid programs.
Probably the biggest area of concern for emergency providers in regards to these cuts is the various Blue Cross/Blue Shield plans throughout the country. Many BCBS carriers base their reimbursement on the Medicare rates and are not open to negotiation with providers for premium fees. Much like managed care plans, non-participation in BCBS plans means that the patients will be paid directly, creating a burden on the patient and a politically difficult situation for the provider of service.
How This Effects You
I can imagine that many who have read this far are thinking “That sucks for the emergency healthcare providers, but, how does this affect me and why should I care?”…
These cuts to Medicare payment rates will be felt by anyone who wanders into an emergency room. Many providers will be forced to terminate participation with plans that follow Medicare reimbursement methodology to offset the losses that can not be avoided in the Medicare population. This will result in higher out of network co-pays and deductibles for members of these plans, or payments being made directly to the patient.
Emergency room physicians will also be forced to seek alternate sources of revenue to offset losses brought on by the cuts. This is usually done in the form of higher fees charged for services rendered. The higher fees will not increase revenue from Medicare or payers using Medicare as their basis for payment. Those directly affected by the increased fees will be those without insurance, the self-pay population, those that normally cannot afford the already pricey services in the first place.
Increases in emergency physician fees will be analyzed by insurance carriers when they review what they charge for member premiums. This is one of the many factors carriers take into account when determining what to charge their members for coverage. Which is why you’ll see your BCBS premiums increase, while reading that your local BCBS carrier is carrying surpluses in the tens of millions of dollars (see Carefirst in Maryland and Highmark in Pennsylvania). It is a dangerous catch-22 that leaves the patient in the middle.
While many may not be sympathetic to the “plight” of emergency physicians, it must be taken into account that, unlike pretty much every other specialty, emergency room physicians cannot turn a patient away based on their ability to pay or what type of insurance coverage they have. So while primary care physicians can limit the number of new Medicare patients they treat each year, ED physicians do not have that luxury. ED physicians also pay among the highest premiums for malpractice insurance (along with OBGyns) as well as serving what may be the most grueling aspect of the medical community.
One must also remember, during the seven year duration of these cuts, emergency physician practice expenses are expected to rise at a rate of 3-5% per year, based on recent history.
Please bear in mind that the statements and figures above are based on my years of experience in emergency physician billing, from many aspects of the process. I have worked in accounts receivables, regulatory affairs and managed care contract negotiations.
I’m not sure what the solution is, outside a complete revamp of the payment system…