Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Medicare and Medicaid Cuts One of Many Revenue Problems

By Stephanie Reardon

Medicare and Medicaid pay less for services rendered than private insurance.

- The Medicaid “fee bump” instated by the Affordable Care Act (ACA) temporarily increased the reimbursement rates for doctors who accepted Medicaid patients. The two year extension ended on January 1, 2015, and it is estimated that the drop could be as high as 50 percent, with an average of just under 22 percent.

A study completed by the Urban Institute, examined the potential changes reimbursement rates. This rate would vary from state to state.

“This situation likely reflects budgetary concerns. However, significant drops in primary care reimbursement may lead physicians to see fewer Medicaid patients, potentially leading these patients to have difficulty finding a physician or getting an appointment,” the study states. It summarizes that money isn’t the only factor that could cause Medicaid patients to have trouble finding a primary care physician, but that there appeared to be a correlation between Medicaid fees and appointment availability.

This blog previously reported on the revenue cycle impact the expiration of the “fee bump” could cause, including a reduction in appointment availability for Medicaid patients seeking primary care. Instead, primary care physicians could turn these patients away, in turn increasing emergency department volumes.

However, the loss of the ACA “fee bump” is just one of many revenue problems that physicians have encountered over the past few years. Doctors and hospitals also face multiple penalty fees for preventable readmission rates (which could reach approximately $17 billion annually), security breach penalties, and other non- compliance issues.

Cuts for doctors that accept Medicaid patients are a regularly scheduled problem. In 1997, the sustainable growth rate (SGR) formula was put in place in order to allow regulators to cut Medicaid fees if they went over the target expected spending rate. Congress still uses SGR to determine cuts.

Often Congress votes against these cuts as Medicaid spending doesn’t reach the target amount, but postponing these cuts has its own drawback: deficit payments pile up. As a result, congress is expected to cut both Medicaid and Medicare reimbursement rates.

Already, physicians find these cuts challenging and some are turning patients away. KHOU, a CBS news affiliate, reported that 58 percent of Texan providers are threatening to refuse to accept Medicare reimbursements or are already doing so.

“We are thinking about coming out of Medicare all together because we’re making less and less money,” Dr. Reeta Achari told KHOU in an interview. “It’s a losing proposition. I can’t help anybody if I can’t keep my doors open.”

Achari also indicated that in the past five years her practice has seen a 10 percent cut in Medicaid reimbursement payments and she expects a seven percent further drop in payment reimbursements within the next year.

In General, Medicare and Medicaid pay less for services rendered than private insurance. According to a report on CNN, Medicare paid about 80 percent of what private insurers paid for services, while Medicaid paid about 56 percent.



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