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Will 21% cut to Medicare reimbursements get repealed?

In addition to speculating about federal healthcare reform implementation, physicians are also wondering when Congress will provide an answer regarding an additional 21 percent cut to Medicare reimbursements that went into effect April 1.

Healthcare providers believe the cut will increasingly compromise healthcare access for Medicare patients, as doctors who serve those patients are taking a big hit to their bottom lines.

Physicians want “a pathway for a permanent repeal” of the Sustainable Growth Rate (SGR) formula upon which Medicare fees are based. At the end of 2009, state medical associations across the country joined the American Medical Association (AMA) in urging Congress to establish that pathway. Many hoped it would be included in the healthcare reform bill but with no such luck.

There is a flaw in the SGR formula, said Greg Anderson, a partner at HORNE LLP in the firm’s Hattiesburg office who handles physician health care leadership.

The formula has been around since 1998, and was put in place to control spending under Medicare Part B, which is the physician reimbursement piece, Anderson said. Over last five years, Congress has essentially set aside smaller reductions which have accumulated to a significant number. 

With the SGR mechanism for setting rates, there is an overall target amount for government spending on Medicare supplies and services, Anderson said. That target spending rate is based on estimated changes to physician fees, the number of Medicare beneficiaries, the change in per capita GDP and changes in expenditures due to regulatory changes. 

The 21 percent cut originally went into effect March 1, 2010, but was delayed until April 1 after Congress stepped in and passed the Temporary Extension Act of 2010.

Healthcare providers are assuming that Congress will reverse the cut. 

“I am concerned about fact that physicians are probably going to limit or stop seeing or accepting new Medicare patients,” Anderson said.

Physicians’ options are to do nothing, lessen the number Medicare patients they will care for, stop seeing new Medicare patients or stop seeing them altogether, he said.

According to U.S. Census data, in 2000, 12 percent of Mississippians – or 343,000 people — were age 65 and older, thus qualifying for Medicare benefits. The state population was then 2.8 million. In 2008, Mississippi’s population was 2.9 million.


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