colonel_sandersI may end up eating my words about this. We’ll see.

James Rohack, the current AMA President, made a post at Kevin MD about why patients should care about fixing the pending Medicare payment cuts. Basically his take on the matter was that if the cuts go through, many physicians will stop seeing Medicare patients and that some seniors on Medicare will have difficulty finding medical care. I tend to agree with him.

I commented that we should let Congress cut Medicare payments. Stop fighting it. I won’t rehash everything, but suffice it to say that I think we need a crisis in medicine to get things straightened out right now.

A Medicare pay cut of 21.2% has been looming over physicians’ heads for several months now. The same pay cut has come up in the past, but, through some last minute “miracle” (otherwise known as brinksmanship), the pay cuts are averted, the deadlines are extended, and the medial societies pat themselves on the back for all of their hard work in averting disaster.

Now the stakes just went up.

The Senate blocked the latest legislation to extend the deadlines for the pay cut. Pay cuts will take effect on Monday.

Physicians now will have to make an important decision. March 17 is the deadline for physicians to decide whether they will continue to participate in the Medicare program. Things are a little more complicated than this, but the basic consequences of the decision are the following: If physicians decide to participate, then they’re stuck with the 21% pay cut. If physicians decide not to participate, then Medicare patients have to pay the physicians’ fees out of pocket — or find another doctor who accepts Medicare. Why don’t all physicians just drop Medicare and then sign back up when the rate cuts go away? Another arcane rule crafted by Medicare – once you decide not to participate, you can’t participate again for a minimum of two years.

So do physicians drop low payments and gamble that payments won’t go up in the future? Or do they bite the bullet and continue providing services at even more of a pittance? Our physician organizations need to collectively tell Medicare to go pound sand.

Maybe this is what the government wants. Notice how the payroll deductions for Medicare and Medicaid aren’t getting any smaller. But with less people working, the amount of money collected is becoming less and less while the numbers of people needing the services continues to increase. By significantly reducing the number of available providers, perhaps the government wonks believe that they can reduce the amount of money they spend on care.

Initially, that may be true. Then what happens?

First, a good percentage of about 40 million AARP members, and a significant portion of the rest of the Medicare population, are going to become extremely upset when they can’t find a doctor to take care of them.

Then, just based on sheer percentages, every single member of Congress is going to get at least a few phone calls from angry constituents who are no longer able to find medical care. The legislators will go into damage control mode, but it will be too late – because even if Congress raises the pay a week after the opt-out decision deadline, those doctors that opted out still won’t be able to participate in Medicare for another two years. There will be a lot of turnover in Congress in November and that’s something else we need.

If a lot of physicians opt out of Medicare, the health care system will turn chaotic. Maybe a few of the well-to-do elderly patients will pay out of pocket to continue seeing their current physician. However, most will start calling around to find other physicians who still accept Medicare. The wait lists with those physicians will grow from weeks to months.

In the meantime, elderly patients will go to emergency departments for their health care needs because we emergency physicians will always be there to help them when their doctors aren’t available (I’m already starting to see this happen in my ED) and because the hospitals won’t dare to opt out of Medicare.

Hospitals accept Medicare … Medicare pays for care rendered to seniors … seniors go to hospitals. Seniors who come to the emergency department tend to get BMWs (but remember, folks, defensive medicine doesn’t exist), therefore costs to Medicare go up, not down. Medicare goes bankrupt sooner than anticipated.

A crisis like this is what we need to get legislators back to the table to create a better health care plan. It needs to happen. Even the status quo is unacceptable.

I doubt it will happen, though. CMS has announced that it will not process claims for Medicare payments for the first two weeks of March, so my prediction is that Congress will eliminate the pay cuts next week and that all the physicians will get their “full” payments after March 14. We’ll continue in the same dysfunctional system until the next crisis occurs about 10 months from now.


Gutsy move by Congress letting things get this far, though. No matter what happens, this is turning into one helluva game of chicken.

See Throckmorton’s blog for another good point – with the cuts to reimbursements also come a cut to reimbursements for medical care to all of our soldiers. What happens to Congress?
There are already reports that a bill will be introduced this week to delay the effective dates of the cuts for another 30 days. And the AMA is actually showing doctors how to drop Medicare, if they so choose, including samples of documents to file (.pdf file – also contains excellent explanation of options physicians have regarding participation versus non-participation)
The merry-go-round continues.


  1. “A crisis like this is what we need to get legislators back to the table to create a better health care plan.”

    Have you paid the slightest bit of attention to what has happened in Congress?

    There are two options: something really similar to what Obama’s proposing and nothing.

    You don’t even pretend to claim there is some “better health care plan” waiting in the wings, because you know there’s not.

    On to the bigger picture, do you think doctors will finally wake up and realize the Republican Party’s been taking them on a ride for years? It’s cute how you blame “the Senate” for the problem, rather than the party whose unified efforts have caused it.

    • Option #3:
      Throw out the abomination of a plan and start over – like 57% of the American public recommends.
      I don’t “blame” the Senate, I simply stated that the block came from the Senate.
      I actually agree with Bunning.

    • Max,

      In the 2400 pages of the Senate / “new” Obama plan there is no fix for the SGR.

      An interesting read is at the happyhospitalist blog. He discusses how physician income has remained stagnant/decreased over the last 10 years while the cost of business has increased. Won’t rehash his discussion here, but it wouldn’t be a huge leap to think if my pay is cut 21% I may be laying off staff.

      • I see, “start over.”

        What a great plan. Let’s apply that to all future social, economic and military problems. When problems arise, “start over.” Viola – problem solved.

        Right now, and for the foreseeable future, there are two plans: the Democratic plan and the Republican no-plan. If you prefer one over the other, that’s one thing, but pretending there are unspecified-but-inherently-better options is a joke.

        The SGR is being held up solely by Republicans solely for propaganda reasons. You know that but, for inexplicable reasons, don’t care, because you think that disrupting the livelihoods of doctors and the care of the elderly will magically result in the drafting and passage of some unspecified better plan.

        “Hope is not a plan.”

      • Prior reply was meant for WC.

        Regarding your post, true, the SGR is separate from the Obama plan. But you know as well as I do that Democrats are entirely in favor of the SGR fix and Republicans are entirely opposed, and that the Republican opposition is solely for tactical reasons related to the Obama plan.

  2. Part of your analysis is what the law says now. Actually, Congress can/will change everything around “temporarily” depending on the doctor’s revolt. The 2-year rule about resuming Medicare participation will be relaxed as needed to provide medical services to Medicare patients.

    Of course, as you point out, the Doctor Fix (now, 7 years of temporarily delaying the pay cuts) will of course be extended. Congress will not take such a big jump, not knowing how it would land.

    • Andrew:

      I tend to agree with you. One of the trends that ha4 been in the background of the healthcare debate is the fact that you can expand Medicaid, SCHIP and Medica3e but you have to find some medical provider to accept it. Medicaid pays 60 percent of Medicare. SCHIP barely pays 70. The costs of practicing medicine is going up. It really doesn’t matter if Congress fixes SGR or not. They have already fallen below the amount that you need to be reimbursed just to stay open, to comply with all their mandates, and to support the Trial Lawyers lobby. Let’s drop out and have patients pay for their care and try to fight CMS to get some of their money back! Nothinf will change medicine faster than people whose own money is on the line.

      Oh, Andrew. I love you insightful blog!

      • My understanding is that if a Medicare patient goes to a Doc who has opted out of Medicare, then the patient is on the hook for the bill and cannot be reimbursed by Medicare(or the pittance Medicare would normally pay) … is this correct? Is this true for Medicaid also?
        If so, this really does not bode well for hospital Emergency

      • Igloodoc:

        If a Medicare patient sees a non-participating physician, the patients must pay the bill and then the patient must file and attempt to get reimbursement. It is the same for Medicaid.

  3. Maybe it’s a ruse to get the healthcare bill passed.

    Big Insurance and Big Pharma have seemed to come through this debacle unscathed, and perhaps a softer target is needed. As the AMA has proven, Docs are easily divided and mostly harmless, unlike our blogging friends from Big Law. Look for the 21% cut. If we resist and log out of Medicare, politicians will be dragging out and tossing around the old Hippocratic Oath chestnut. As in “Those rich, greedy, bourgeois doctors who grind the face of the poor have taken the Hippocratic Oath…”

    However the last laugh will be on the politicians, because just like Winnie the Pooh’s character Eeyore, Docs will just say “oh well, we didn’t want a raise anyway” and continue to sign on to Medicare like lemmings. So much for the revolt, and healthcare doesn’t pass.
    Of course, the politicians will have found a new source for continued cutbacks.

    • I tend to agree here. It will be interesting to see how many doctors can survive without the government payor income.

      It’s like a pro sports lockout. Have the players saved enough to hold out long enough to soften up the owners?

    • Matt:

      In our area many of the physicians are already non-par. This is especially true in several of the specialties. In our major medical center, 52% of the patients are government payors, yet private payors bring in 82% of the revenue. The bulk of the expenses are concentrated on the government payors for whom the reimbursement is the least. From a simple economic ration, it can be computed that if stop accepting government payors, you decrease your expenses and overhead and can reach a point where you are actually better off. For a medical center, this is not possible to do, but for a private medical practice it is already a reality. By not seeing government payors, you can make more and work less.

      The good news is that most of us are not good at business and take care of those who dont pay and try to sue us anyway.

      • With approximately half of all healthcare dollars paid by the govt, there’s no way all of you can bail on them. The money isn’t there for you to do it and maintain your current levels of income.

        You guys cry for the free market, well if all physicians are competing for the 1/2 of the dollars, then you’re getting ready to experience the true free market. Hope you like it.

        Make more and work less only works as long as very few of you are hitting the non-govt. pot.

      • Matt:

        If it were all about income, we wouldnt take federal dollars. We make far more on private dollars. In fact, we barely break even or even lose slightly on Medicare, we lose big on Medicaid. How big and how bad you do depends alot on the specialty. We would do much better if all that government money was pulled out becuase it would be replaced by private dollars. As I said before, its all about the economics. The same is true for hospitals. They make money on private and lose on government. The thing about medicine is that people are always getting sick. Demand for services isnt a problem. Let the patients pay out of their pocket and then try to get reimbursed from the government and they will have a whole new outlook on healthcare.

      • Throck,

        I don’t pretend to understand the economics of your individual practices. But I don’t see how all of you can dump the government when that’s half of all healthcare expenditures. Without all of you taking significant pay cuts. Overhead costs, I assume, don’t change. Staff still has to be paid, equipment still has to be leased or paid for, etc.

        You’ve got generations of people, including the largest and wealthiest (and perhaps least prepared for retirement costs) bloc in US history in the baby boomers, who expect the government to pick up much of their healthcare. Do you really think politicians are going to give them tough love and tell them they’re going out of pocket?

        Do the math on that one: 78 pissed off baby boomers v. 1.5 million pissed off doctors. Who do you think gets the tough love from government in that case?

        Maybe you can sway these baby boomers to your side, but your lobbying efforts in most areas are pretty anemic it seems. I wouldn’t hold out hope.

  4. i have an idea… since the government is hoping health care to medicare pts will magically cost 21% less to deliver, why not mandate that all expenses by offices that take medicare be cut by 21% as well? anything paid for/purchased by physicians, hospitals and their employees should be 21% less. you just present a card and everyone has to comply, from the rent on a doctor’s office space to a hospital janitor going out to the movies with his family. and then… watch the cost shifting begin so everyone can account for their losses

    • Paul,

      I think you are being sarcastic (good). Amazingly, that is exactly the Democratic plan.

      The push for “comprehensive” health care reform is to set prices for all of the inputs to healthcare, and manage healthcare delivery to be “cost effective”.

      They think that they can set prices on everything, and know the “fair” compensation for everyone in health care. (Actually, they think they know the “fair” compensation for everyone, everywhere.)

      They know that fixing prices and responsibilities will fail in any small part of the economy. Their solution will be to “make healthcare work” by extending controls outward to all contributing factors of production.

    • Paul:

      One of the big players in the game is United Health. They are the primary Medicare supplement insurers through AARP. As more and more seniors become Medicare elegible and Medicare becomes more and more watered down, the need for the supplement becomes greater. In our area, United will process your claim when you see a non-par physican so the patient doesn’t have to. This is why you dont hear AARP complaining about the rate cuts. They are in bed with United Health who stands to do very well.

  5. I don’t know why you physicians think what is effectively “striking” will be good for you. If you all stop taking Medicare/Medicaid patients, you’ve just created a massive new voter bloc for the Democrats’ plan.

    On the other hand, if you don’t, then you take the cut. Of course, some of you will threaten to leave medicine, but where will you go? Where will you be able to make anywhere near as much money quickly? Unless you’ve done some amazing financial planning, how can you take the hit to learn how to do something else that pays comparable and still pay all your regular bills?

    Single payer or universal care will almost certainly result in significant pay reductions for you. You’ve often longed for European legal systems, and now you’re about to get European physician pay!

    I’m not sure why you were not more of a part of the healthcare debate. You’re noisy on legal matters, but you’re inexplicably silent on everything else. Misplaced priorities may bite you. I’d be looking for some new lobbyists if I were you.

    It will be interesting to see how patients are affected.

    • Matt:

      I dont think you understand. Physicians are not going on a strike. They are becoming non-participating. This means that the government dollars are still there. The physicain sees the patient and can bill at 95% of the Medicare rate. The patient is then personally responsible for the bill and must pay it. The patient then has the onus of gettin reimbursed. Doctors are not abandoning patients, they are meary letting the patients have personal control of the flow of their healthcare dollars. Patients will see how much of their healthcare is not reimbursed and will feel it in both their pocketbooks and in frustration. Our patients will be the best lobbyists.

      • I understand, I just think you’re being overly optimistic about the response of the public and the government. I think you’re only inviting single payer more by doing that, which would seem to be the exact opposite of what you say you want.

        You think the public will turn on the government. More likely they’ll turn on you. After all, YOU are the one who is sending the bills.

      • I think Matt has a point here.

        Most people aren’t informed about the trials and tribulations of their physicians, but they are about their own. When the people are hurting enough could be the opportunity this administration is waiting for ..and come in with an 11th hour rescue government health plan ..which would be ironic ..given that mdcr/mdcd are so in the hole.

        Also ..many patients just do not have the money up front to pay for services… and so will go without ..or hit the ED’s ..but still be unable to do afford follow-up.

        Then again ..they may rise up as with the tea party movement ..but in the meantime a lot of people will suffer without quality care.

        I think physicians have to present a united front, get their views heard during this next mdcr reprieve. It does have to be addressed.

        My heart goes out to the elderly people who would be clueless about paperwork, negotiating-fighting for coverage, etc. i also think it is sad that all these years they had coverage and thought they would and now it may not be there. Of course if the program goes bust won’t be there.

      • I also didn’t mean to say insinuate that patients have more of a right to insurance than physicians do being paid. They *deserve* to be paid for their services!

        Also … if physicians don’t contest the mdcr cut and everything is the status quo for awhile ..then it seems there would be another mdcr cut down the road and another..because if you don’t fight for your money then have indicated you will take whatever they do to you.


      • Throckmorton – couldn’t have said it better myself.

        Matt – in many respects we are already single payer. One of the hospitals where I work has only 1.5% of patients with commercial insurance. Most are either Medicare, Medicaid, or a smattering of worker’s comp cases.
        The only problem is that 15% of the population has no access to medical care.

        You’re right that this debate will come down to who the public vilifies more – government or physicians.

        I’m betting you’re wrong about the outcome, though.

      • I hope I am. But if I were you I’d be doing a lot less betting with my money and a lot more lobbying. So far the efforts of physicians have been at best anemic.

  6. So I’m guessing the ‘gap’ payment doesn’t exist in America? Just wondering, because in Australia, if the insurance company doesn’t sufficiently reimburse the physician, they can charge the patient to cover this ‘gap’. So if reimbursement rates fall, instead of dropping that insurance company, they just increase the ‘gap’ charge.

  7. Not to be a huge beartch, but is only being paid $60 instead of $75 for a typical office visit *really* a reason to drop out of Medicare entirely? Yes, overall, getting paid 20% less for the same thing totally sucks, but, really, drop out en masse?

    It will take a long time to find enough new patients to fill all those slots taken up by Medicareurs for most people. Sure, maybe some doctors have a waiting list of insured patients waiting in the wings, but I haven’t really run into that, at least around here. I would imagine that most people’d make less money not seeing Medicare patients than if they did.

    • This was my initial point… I believe the Washington Machine is counting on a revolt by the Docs. The “rich, uncaring” Docs drop medicare, the patients start seeing what the actual costs are and go all “The government has to do sumthin, dood”. Then, trowel in the single payer plan, heavy regulation, caps on income, mandatory participation etc etc.

      But, Nurse K is spot on (proving once again, her beauty is only exceeded by her intellect). Docs, predictably, will whine and complain, stamp their feet, and surrender. The AMA already raised the white flag, with the terms of surrender being “a spot at the big people table so our voice can be heard”. So far their voice has been “would you like fries with your order and make it to go?”

      So, all the AARPeurs and the medicaideurs will see is the medicare cuts, waiting lists and the…dur… ED becomes primary care. The Healthcare bill fails.

      And then the real medicare reimbursement cuts begin.

    • Hence the title of the post: Brinksmanship

      Both sides are digging in their heels and threatening disaster. Only one side will win.

      The ace in the hole for the docs is that the government has two massive entitlement programs that it must keep afloat lest there becomes a civil revolt. Congress knows that. Medicare collapses like Medicaid has done and there will be a lot of incumbents looking for new jobs.
      In order to keep those entitlement programs afloat, the government MUST have doctors to provide the services.

      The cut in pay isn’t the only issue. Expenses are increasing. Paperwork is increasing. Regulatory oversight is increasing. EMTALA. HIPAA. JCAHO. Multiple payment rejections. EOBs in hieroglyphics requiring multiple 30 minute phone calls to CMS central. Government seeking reimbursement for “overpayment” to physicians.

      A straight cut in pay is the old frog in the hot water analogy. The frog jumps out if you throw it into boiling water, but cooks to death if you slowly turn up the heat.

      A lot of office physicians are pondering the following question, though: Is it really worth it to deal with all of the extra hassles, the extra liability for a patient with multiple risk factors for bad outcomes, the extra risk of government audits, AND a 21% pay cut to boot?

      The next week or two will be a test to see whether Medicare needs doctors more than doctors need Medicare.

      I’m betting that government will swerve first in this game of chicken, but I hope that it doesn’t.

      The system and Congress need a good vetting.

  8. You want to know where physicians went wrong? It’s laid out nicely here:

    “DAVID KESTENBAUM: Califano was President Lyndon Johnson’s adviser for domestic affairs. And the government was about to get into the health insurance business in a huge way – about to launch the largest health insurance plan we’ve ever had: Medicare. But the idea made doctors nervous, so LBJ, Califano and lawmakers made what seemed like a small concession. The government told doctors: We will pay you for every procedure you do. How much will we pay you? Whatever you think is right.

    JOFFE-WALT: Califano shakes his head describing that call now. But he says, look, the government needed doctors to participate. If doctors didn’t accept Medicare, wouldn’t see patients covered by Medicare, the whole thing would fail.

    . . .

    Dr. LUCIAN LEAPE (Surgeon): We found out what the general fee for our service was and charged that or maybe added 10 percent, ’cause of course I’m better than average. And so it was an incentive for doctors to charge what they thought was reasonable for them, and then of course to increase it every year by, say, 5 or 10 percent.

    KESTENBAUM: Medicare solution for how to pay doctors put into cement this idea of fee for service, paying doctors per procedure for every test, every scan. That sounds reasonable, but it served as a nudge to err on the safe side – to do more tests, to do that exploratory surgery.”

    You caved for a few more dollars, but it turned out to be unsustainable and now you’re getting bit back.

    And maybe the “defensive medicine” isn’t so defensive after all. It’s possible that it could be offensive!! It’d be interesting to see the comparison between what tests physicians were doing prior to the third party payor system and what they were doing shortly thereafter. Of course, you’d blame it all on lawsuits, but still it would be interesting.

    All that being said, my prediction is you’ve let the public get too used to not paying out of pocket, so they’re not going to be willing to go back, and will prefer to nationalize you rather than have to start writing checks directly to you. Hopefully I’m wrong.

    Although you’d seem a lot more honest in your anti-government rants if you didn’t keep asking the government to take over the jury system while getting out of the way of medicine.

  9. I don’t know, Matt. I recently went to my doctor for a sciatica flare. I told her straight up that my deductible for x-rays/labs was 1000.00. I went back for another flare. Turns out, my BP was highish on both visits. So, she tells her MA to enter high blood pressure as a diagnosis, gives me a script for lisinopril, but then tells me to “monitor my blood pressure at home and start the medication if I need to.” Then, she proceeds to order a CBC, CMP, LFTs and a TSH to boot. What for? I have no clue. She knew I would have to pay out-of-pocket for this.

    I am a healthcare professional. I don’t let my doctors know because I just don’t. I like to see what they will do with the most basic of information I give them to gauge what they order and say to do.

    • well, I have no idea why she ordered LFTs and a CMP since LFTs are part of a CMP, but assuming that is not correct and what was actually ordered was a BMP(+/- LFTs), CBC, TSH then the only thing I quibble with is the LFTs. Now checking lipids would be reasonable and if elevated you need to know the LFTs before starting a statin because a drug that hasn’t existed for over a decade(baycol) had some liver failure issues and the lawyers are aware of that too.
      But otherwise everything is rec’d for an initial diagnosis of HTN as you are searching for potential causes and evidence of end organ damage as well as other cardiac risk factors. The fact that you have a high deductible doesn’t actually change those recommendations. Now whether you deserved a diagnosis of HTN is apparently debateable from what you present. But journals report all the time that HTN is underdiagnosed and undertreated so maybe she’s just trying to be a good doctor.


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