Medicare Payment Cuts Threats

How can we keep our reimbursement stable with threats of Medicare payment cuts? Another year and another potential Medicare cut averted at the last minute. As always, the cuts looked unavoidable, but no lawmakers wanted to be on the unpopular side of Medicare recipients and their strong lobby this election year. It is evident to everyone that Medicare as we know it today is in real trouble and will either become insolvent or face major changes. Depending on who wins the election, you could either see any or all of the following: payment reductions, increased Medicare taxes, higher exemption levels, further age delays to qualify, or other plans that have not yet been widely revealed.

What does all this mean for Emergency Medicine and our reimbursement? Considering that many Emergency Physician groups rely on Medicare for 20-50% of their reimbursement, the solvency and reimbursement rates of Medicare are really important. While Medicare is important, many ED groups rely more on managed care contracts for the largest share of reimbursement. You can’t control what happens with Medicare; however, you can control other contracts.

Above all, make sure that all of your Managed Care Contracts tie reimbursement to something other than a percentage of Medicare. Medicare reimbursement is too uncertain. Look to contract at a percentage of charges (preferred) or a conversion factor based on the RVU as stated in the Federal Register. A percentage of charges contract is very clean and easy for your billing vendor to calculate. They can make certain you are paid correctly; however, most plans are unwilling to do this as they want to bundle certain charge codes to save money at your expense.

The other typical contract option is to tie reimbursement to a conversion factor. With this you need to make 100% certain that the managed care company is giving you the full RVU as listed in the Federal Register. Many plans try to apply the Federal Government budget neutrality adjustment or a local geographic adjustment factor to reduce your reimbursement from the full rate. This trick is very common as I have seen multiple companies try this in the last month. This trick can reduce your reimbursement by as much as 10% in some instances I have witnessed. Lesson here is to require the exact reimbursement amounts for your 25 most used codes as part of the contract.

While we can’t control the fate of Medicare, we can control other contracts. Don’t allow a managed care plan to trap you into contracted on a percentage of Medicare that could drop as much as 10% in one year.