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Medicare Part B Physician Payment Reduction Alert

November 4, 2010 | Comments Off on Medicare Part B Physician Payment Reduction Alert
Posted by Frank Ciesla

CMS posted on November 2nd the 2011 Medicare payment rules that apply to, among others, physician services.  This rule provides that without Congressional action, Medicare Part B physician payments will be slashed 23% beginning December 1st, with an additional 2% reduction scheduled as of January 1, 2011.

In light of the election, the issue is whether or not this payment reduction will be addressed before November 30th by the lame duck Congress.  If addressed, will Congress just kick the can down the road for a couple of months, or for a couple of years until after the next election, or will Congress adopt a permanent solution?  If Congress kicks the can down the road for a couple of months, then the issue will need to be addressed again by the new Congress.

The payment reduction will, if implemented, adversely impact both Medicare beneficiaries and providers.  If Congress determines not to address the reduction in physician payments, it is very likely that the Medicare population will no longer be treated by physicians in their offices, as is already the case for much of the Medicaid population in New Jersey.  This very large population will have to seek physician services in hospital clinics, FQHC’s or hospital emergency rooms.  However, if Congress does defer or eliminate the decrease in physician payments, it will necessitate an increase in the premiums paid for Part B by certain Medicare beneficiaries, as well as the portion of the cost of Part B services to the Medicare beneficiaries, which will need to be paid out of the general revenue.

If payments are not adjusted, hospitals, physician practices and other Medicare providers and suppliers who are taking assignment in exchange for paying physician employees a salary will see the reduction in their revenue stream in cases where services are being provided to Medicare patients.  This has an impact on the viability of the employer, as well as its ability to pay its employees, its bank loans and its expenses.  There is clearly the possibility that some medical practices, providers and suppliers impacted by the payment cuts will no longer be viable if the payment cuts are allowed to remain in place.

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