If you pay any attention to the national news then you must have heard all the recent talk about Payroll taxes and unemployment and the extension of the payroll tax cuts of 2010. Even if you don’t follow the national news closely it would be almost impossible to live in this country and not have heard something. What many don’t realize is that this payroll tax legislation greatly affects the medical community. You see, buried deep in this legislation is a quick fix (or patch) to a 27.4% cut to Medicare rates for physicians.
Personally I hate the fact that lawmakers take completely unrelated issues and bunch them up in a package. I get why they do it but personally I feel it’s ridiculous. What does physician’s Medicare reimbursement rates have to do the payroll taxes and unemployment? And there are many other items buried in this package as well. Anyway, I’ll have to move on since that isn’t the topic of this article.
To give you all a little background on 12/23/11 the House and Senate approved a two month extension to the payroll tax bill that was due to expire at the end of the year which contained the 27.4% pay cut legislation. Physicians across the country were very angry that lawmakers waited so long to address the issue. The 27.4% cut to physician’s rates came so close to taking effect that the Centers for Medicare and Medicaid Services had instructed all contractors to be prepared to hold all 2012 payments for 10 days giving lawmakers two additional weeks to come up with a solution.
The extension voted on 12/23/11 is due to expire on 2/29/2012. Just before midnight last Wednesday lawmakers approved a proposal that went before the House and Senate on Friday. It passed both the House and Senate and President Obama is expected to sign.
The problem with these extensions is that they are short term fixes. And for physicians the main focus of the legislation is the payroll taxes and unemployment benefits – not the Medicare pay cuts. Physicians are upset because they feel that Congress is compromising patient care and risking the health of millions of seniors.
The current extensions allowed for a 1% increase in reimbursements for 2012 and a 1% increase for 2013. The problem is that if lawmakers allow the cuts to take effect it will have huge ramifications. 27.4% is a HUGE cut. Physicians will react in many ways. In my opinion a lot will chose to disenroll from the Medicare program and not continue to treat Medicare patients any longer. But many physicians have a very high load of Medicare patients. It is not just a matter of deciding not to accept Medicare any longer. They must decide how that decision will impact them financially.
Many will want to disenroll to send a message to Washington but there is more to consider than just the financial side. What will seniors do for care if a large number of physidians drop Medicare? The few physicians who stay in the program will be overbooked but will the reimbursements be enough to cover the expenses the physicians incur?
A lot of Americans feel that the physicians can afford to take a pay cut. I don’t agree with them. Most people don’t understand the expenses a physician faces in today’s world. First there is the obvious repayment of student loans. It costs a lot of money to become a physician. Then there are the costs of practicing:insurance, office space, equipment, staff, utilities, etc. There are really too many to list. Physicians do not simply get paid whatever is allowed to them for each patient. They have a lot of overhead. Not only would a pay cut of this magnitude affect the doctors themselves, but it would also trickle down to employees, nurses, staff, and billing services.