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How the “Flat-Rate” Medicare Proposal will hurt physician income

The federal government is trying to rein in the costs of healthcare, and part of its plan is to overhaul the way that physicians are paid for outpatient services. The Centers for Medicare and Medicaid Services (CMS) plans to change how doctors are paid. This affects everyone, regardless of whether they are a participant in Medicare.

New CMS Payment Rules
Under the CMS proposal, doctors who accept Medicare will get paid one rate for an office visit. It will not matter if the checkup is for an ingrown toenail or pancreatic cancer. An office visit will yield a flat reimbursement rate that is lower than what they currently receive. The current system has four code levels for new patient visits and follow-up care. The levels are based on the degree of medical complexity. The more complex or more chronic conditions a patient has, the higher the current billing rate. This is because complex cases take more time to manage.

The goal of the Changes
CMS wants to reduce paperwork. That is welcome for most doctors. The CMS proposal expects that physician burnout will decrease because doctors won’t spend as much time on paperwork and billing. Doctors might have more time to dedicate to patients.

What Doctors Think
Physician groups around the country think that the proposed CMS changes could have adverse effects on patient outcomes and physicians being able to stay in practice. Doctors might spend less time per patient. This is because they might try to fit more patients in so that they can make up for the lower per-patient pay rate. Doctors might require patients to book multiple appointments if they have multiple problems. If a patient has diabetes and high blood pressure, they might have to book one visit for each problem. Doctors in private practice might end up referring the most complex patients to academic research institutions. This could put a significant burden on the patient. If a patient has an office visit and an outpatient procedure such as an EKG on the same day or during the same visit, the CMS rules cut the doctor’s payment by 50 percent. This would lead to doctors seeing the patient and scheduling the test for another day so that they can get the full billing rate. Patients would be inconvenienced, and administrators would spend twice as much time doing the billing for two visits instead of one.

Effects on Patients
If doctors cannot make a living by having Medicare patients in their role of patients, they might have to drop serving Medicare patients altogether. Patients may have to wait a long time to see their doctors. Acute illnesses may be difficult to fit into the doctor’s schedule, increasing the burden on urgent care centers and emergency rooms for issues such as sinus infections that used to be taken care of on a same-day or next-day visit. Rushed doctors make more errors in diagnosing and treating patients.

Long-term Effects on Physician Income
Private insurers often follow the precedent set by CMS. They might lower their pay rates after CMS lowers theirs.Physician banks often deal with long-term student loans taken out when a person goes to medical school or starts their practice. Doctors may have a difficult time repaying their debts if their income decreases.

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