Quit Wasting My Healthcare

The Washington Post reported yesterday that President Bush will once again delay the balanced budget paycuts for physician fees until a compromise solution can be worked out.  Currently, Medicare pays only 80% of the cost of healthcare services for most providers.  Further cuts will only promote cost-shifting to employers and increased service referrals by physicians as they try to make up the revenue shortfall through volume.  For those physicians who cannot fit in any more services, they will likely stop taking Medicare patients altogether furthering limiting care access for seniors and disabled individuals.  

Medicare’s proposals on creating more incentivized and efficient healthcare models has largely failed due to inadequate business knowledge.  Fundamentally, most healthcare providers have given up on trying to become more efficient to realize margins on Medicare patient business since fees are so far below cost.  Even the new quality programs simply penalize providers with further reduced payments if they do not meet minimium standads which in many cases are highly subjective and oftentimes counterproductive to good clinical care.

The shortfalls in the Medicare program are indirectly driving up costs for employers as healthcare providers have accommodated lower Medicare reimbursement by increasing commercial insurance rates.  These rates are passed onto employers and employees through increased premiums (the hidden Medicare Tax).  Simply not serving the Medicare population allows many healthcare providers to offer commercial insurance rates at 20%-30% less than large hospitals and physician groups with significant Medicare business.

Medicare must refocus its energies on better solutions for its members such as cost-plus reimbursement, consumer accountability, and the use of medical homes to guide members to better, lower cost care options.