Changes in Medicare Doctor’s Payments May Produce Cuts in Oregon

April 27, 2015 Senior Medicare Issues

The baby boomers continue to get older and the hits to the Medicare system are piling up. The congressional budget director recently made the following comment. “By 2020, as Baby Boomers continue to age into Medicare at the rate of more than 10,000 a day, Medicare’s cumulative $6.2 trillion in cash flow deficits will constitute 35 percent of the nation’s total debt accumulation.”

It is well known that Medicare is the most costly federal program of our countries budget. With the heavy baby boomer population growing older by the minute, we need far-reaching reforms to Medicare or else we have a medical funding disaster looming in our not too distant future.

Unfortunately the true cost of Medicare is even more ominous. There are some accounting tricks that help Medicare operate under a spending baseline that is not 100 percent transparent and hides the true cost of the program. This due to a 1997 congress initiated spending formula called the Sustainable Growth Rate or SGR.

This program was set into motion with the goal to limit physician and provider reimbursement if Medicare spending exceeded the rate of economic growth. While this is a righteous attempt to get a handle on Medicare expenses and our governmental budgetary woes, there has never historically been any limit of medical provider’s payments as a result of the SGR. The first year that spending exceeded the economic growth rate was in 2003. In the succeeding years since then, there were 17 times that the SGR was set to go into effect, but it never did.

Congress uses what is referred to as a “doc fix” to avoid these otherwise mandated cuts. This typically happens just at the eleventh hour in order to avoid a reduction in provider payments. From the Congressional Budget Offices (CBO) point of view, the doc fix is simply another line item spending increase. It is a well-known fact that Congress will typically pass this doc fix, or temporary pardon, in order to avoid provider payment decreases. A lot of this has to do with lobby efforts. The CBO goes about its business with the assumption that Congress will comply with the SGR each year even though they don’t.

Where Oregon fits into this puzzle has to do with the fact that this state is already significantly under covered in medical providers for its Medicare patients. There are only 16 doctors for every 1000 Medicare patients in Oregon. Under the national average.

If Congress does not act to institute real, permanent Medicare reform, medical providers will experience a mandated 24 percent cut this year. If the cut actually goes through this time without the doc fix override (due to increasing fiscal/budgetary constraints), then the level of care seniors receive in Oregon could get even worse with fewer doctors at their disposal due to an even greater reduction of doctors willing to take Medicare patients.

Additionally, Oregon is rather unique in that more than 46 percent of the state’s physicians are over the age of 50. This is typically the age where many physicians begin to consider cutting back on patient care. These older doctors, if faced with even less compensation for their Medicare patients, may institute cuts in patient visits and care to Medicare patients if their rates are cut by 24 percent for Medicare patients in a single year.

We simply cannot continue to push this problem down the road to our posterity with ongoing temporary and unscrupulous doc fixes. Our nation’s financial condition and our senior’s long term care deserve better.

It is Senior Home Locators position that Congress needs to act by instituting real and permanent reforms to the entire Medicare program before reductions in payment to Medicare providers will kick in. We believe that real reform is such that encouraging patient lifestyle changes, far-reaching prevention programs where patients are taught to eat healthy, exercise and take their health into their own hands, along with the close monitoring of practitioner’s service fees, potential fraud, waste and abuse of the system.