Medicare cutting physician reimbursement

Physicians will be getting coal in their stockings from Uncle Sam come Christmas, 2006. It looks like Medicare reimbursement will be cut by 4.6% for 2007, just in time for those holiday credit card bills.
For several years, these cuts have been mandated to take place on the first of the year as part of Medicare’s legal requirement to maintain expenses under a “sustainable growth rate”, or SGR. Up till now Congressional action has prevented the cuts from taking place, but the budgetary constraints on Medicare growth are likely to force Congress’ hand.
While that is bad enough, this is by no means the end of the bad news. According to California Healthline, the potential cut “represents the first in a series of reductions that will decrease reimbursements by 34% over the next nine years, during which time physician costs likely will increase by 22%.”
The cuts are a result of calculations by CMS based on 2005 increases in utilization of minor services and increased prices. Not surprisingly, the major driver was utilization.
Price fixes are a blunt instrument, but an effective one, at least for the Feds. While these cuts will reduce Federal expenditures, they will undoubtedly lead to higher costs for private payers, as physicians shift costs to their group health patients.
If this continues for many more years, we will have private payers and their insureds subsidizing more than 50% of the cost of Medicare patients.
Sounds like nationalized health care…
What does this mean for you?
Priivate payers’ costs will increase as physicians seek to recoup lost income.