Medicare issue coming to a head

Mike Moran
Business Times

Roger Shenkel
Roger Shenkel

While medical offices and their patients continue to sort through the effects of national health care reform, the more immediate concern could be Medicare.

When Congress reconvenes from recess next month, it will have a little more than two weeks before a Dec. 1 deadline to either allow another 23 percent reduction in Medicare reimbursements to health care providers or postpone the cut as Congress has done twice already this year.

Should the cut take effect, it would hit primary care physicians, many of whom already struggle  to keep income ahead of expenses.

“We’ll do anything we can to keep patients,” said Dr. Roger Shenkel, the executive director of Primary Care Partners in Grand Junction.
But at the same time, it could be difficult for health care providers to absorb cuts in government reimbursements and turn enough profit to keep the office doors open.

Shenkel said a first step could be to refuse to accept new Medicare patients who don’t also carry supplemental insurance from Rocky Mountain Health Plans. “We could not discharge patients, but could not take new patients,” he said.

Due to an unusual arrangement between RMHP and the local Independent Physicians Association, the health insurer compensates doctors at higher levels than they would be paid for treating patients with only Medicare benefits.

Health care professionals contacted by Grand Valley Business Times hold out hope they can continue to treat Medicare patients, but fear the situation will change if the 23 percent cut is implemented. Even if the cut is delayed, there are indications it can’t be postponed forever.

“They’re prolonging the inevitable,” said Lee Ann Shobe, chief executive officer for Western Orthopedics and Sports Medicine in Grand Junction.

“I do think people are scared and worried about the future,” Shobe said.

“It’s almost brinkmanship,” said Dr. David West, former director of the family residency program at St. Mary’s Hospital and a current member of the local Health Care Development Council, which addresses the shortage of primary care physicians in the Grand Valley.

“I’ve been told that AARP (American Association of Retired Persons) is a powerful lobby and they’re not going to let Congress do this (reduce reimbursements).”

West said the Medicare federal health care benefits program should include an inflationary provision to increase payments to health care providers as costs and prices rise.

“The end result for the citizenry is more expensive,” he added.

In the midst of controversy over proposed Medicare cuts, congressional votes delayed the reduction in April and again in June.

The American Medical Association sent a letter to Congress in late September, asking lawmakers to stabilize Medicare physician pay at least through the end of 2011, according to the website at

Meanwhile, the initial provisions of the Patient Protection and Affordable Care Act took effect in September and could affect businesses as health insurance policies are renewed in coming months. Insurance companies face the prospect of dropping limits on coverage and covering some preventive health care services.

As more regulations take effect over the next four years, employers who provide health insurance and have more than 50 employees will be required to pay fines if an employee spends more than 9.8 percent of his or her wages on insurance. Employers will be prevented from firing such employees, leaving business owners with the choice of raising the employee’s salary or paying the fine.

As new health care reform provisions take effect, those who predicted the changes would generate revenue have modified their predictions. One reason is the potential for further cuts in Medicare reimbursements.

When assessing the potential for profit from the changes, the Congressional Budget Office ignored the potential for Medicare cuts, said Neil Waldron, chief marketing officer for RMHP.

“The health plan is supposed to be budget positive. That’s not the case,” Waldron said.

To further complicate the decisions about whether to accept patients receiving government benefits, doctors also keep an eye on the compensation they receive from treating Medicaid patients.

The joint federal and state program that provides benefits for low-income patients presents an even bigger nightmare for doctors than Medicare. While doctors might be forced to write off 40 percent of their fees for Medicare patients, the proportion rises to as much as 70 percent for Medicaid patients, according to local health professionals.

Twenty states cut Medicaid reimbursements during the 2010 fiscal year, which ended June 30 in Colorado. That includes Colorado, which cut physician Medicaid pay for FY 2010 and 2011.

Because Medicaid received an infusion of $87 million from federal stimulus legislation in 2009, the situation could get worse next year.

More states would have adopted Medicaid cuts if not for the stimulus funding, said Vernon Smith, managing principal of the consulting firm Health Management Associates. Smith offered his perspective on the Amednews website in early October.

According to that website, Medicaid enrollment grew nationally by 3.7 million people between December 2008 and December, 2009 — the largest one-year increase in more than 40 years.

Members of the Grand Valley’s Health Care Development Council generally agree changes in the system are needed to provide better access to quality health care at reasonable prices.

Shenkel was instrumental in forming the partnership between the IPA, which represents more than 80 percent of local primary care doctors, and RMHP.

Yet, Shenkel also recognizes that some doctors across the United States have developed a more free-market business model to accommodate patients willing to pay more.

Such so-called concierge practices might charge patients $1,500 a year for the privilege of calling their primary care doctor’s cell phone any time of day. In exchange, the doctor helps ensure he can make a profit.

In the meantime, doctors who seek to earn a living without such specialized pricing face difficult choices — as do patients who might be turned away because they lack insurance to supplement Medicare or Medicaid benefits.

Lower reimbursements for doctors can lead them to consider closing their offices or selling their operations to hospitals or health systems. The affected patients can end up forgoing preventive health measures or go to hospital emergency rooms when they need immediate treatments for ailments.

That increases the pressure during a lame duck session of Congress to address the Medicare situation before the Dec. 1 deadline.

One Response to "Medicare issue coming to a head"

  1. American Medical Association   October 14, 2010 at 7:28 pm

    The AMA is urging Members of Congress to take swift action when they return in November to stop the nearly 23 percent Medicare physician payment cut scheduled for December 1, as well as the approximately 6 percent cut schedule for January 1, from taking effect. These scheduled cuts threaten access to health care for seniors and baby boomers. More information on the broken Medicare physician payment formula and how it is impacting patients and physicians can be found at