When physicians apply to become a “provider” for insurances (that is, are accepted into the provider network, something required before receiving payments for services to patients), part of that contractual arrangement forces the physician to accept a deeply discounted price for the services provided. For example, Medicare will reimburse a physician $60 for an office visit which should cost $125. The physician is not allowed to bill the patient for the difference between the cost of the patient visit and what Medicare actually pays.
Unlike Medicare, other insurances also discount payments to providers, but usually much less severely than Medicare. In addition, with other insurances, patients usually have co-payments and deductibles which the patient must meet. Physicians are allowed to bill the patients for these “patient responsibilities” after the insurances pay physicians the discounted rate for the services provided. However, if the patient has met the insurance policy deductible limit, the physician is left again with no way to recover any of the discounted price.
Patients are unlikely to understand much of this billing scenario unless they carefully read and understand the estimation of benefits (EOB) included with their bill from their physician.
Oh, and don’t forget that Medicare has this bizarre notion that it costs less to provide medical care in rural communities than urban ones, so Medicare reimburses physicians even less in rural areas than those in urban areas. North Dakota’s Senator Conrad has noted that the state of North Dakota has one of the highest ratings for the quality of care provided Medicare patients, but one of the lowest reimbursement rates because the state is primarily rural.
Describing the inanities of physician reimbursement, especially with Medicare, is one thing. But reading about how more and more physicians are beginning to decline Medicare patients for these reasons should wake up the public to how Medicare is choking off the supply of physicians who care for the elderly.
Dr. Natasha Deonarain, describes the Medicare reimbursement dysfunction well in her article “Why I Decided to Opt Out of Medicare as a Provider” which appeared in a KevinMD article. Dr. Deonarain’s narrative gives a place and a name to what every physician who accepts Medicare must deal with in order to serve Medicare patients.
Dr. Deonarain’s story is only an example of one, what the statisticians like to call anecdotal, and hence not worthy of being included in their bean-counting studies. But do note that while this is one physician’s story, every physician in practice who sees Medicare patients could provide a similar story.
Health care reform efforts should be concentrating on the systematic choking off of primary care physicians by Medicare’s draconian reimbursement practices. Medicare fraud isn’t killing Medicare (there is fraud, but much of what is termed fraud is not). Medicare physician reimbursement practices is doing a fine job of driving primary care physicians not out of practice, but into refusing to accept Medicare patients.
Learning the real details of Medicare physician reimbursement requires more than the sound-bite passing glance. Physicians refusing to accept Medicare patients should be a media headline in every publication in this country. Unfortunately, understanding the complexity of the real causes of the dysfunction in our health care system requires not only careful attention to detail, but also the ability to describe what is really going on.
Successful health care reform efforts will need to understand the nature of complexity in systems and avoid the quick-fix bean-counting mentality to bring about any kind of effective change. Patients and their physicians are not statistics, but human beings in extremely complex patient-physician relationships which, quite frankly, may defy logical representation in a statistical formula.
Basing payment discounts (or even notions of fraud) on details taken out of context and made to appear something they are not simply aggravates the dysfunction in our health care system and delays the kinds of changes that have the potential to really improve health care.