Future of programs grim without major alterations

Ongoing reductions in Medicare and Medicaid reimbursements are taking their toll on physician practices as well as hospitals, according to Jeff Griffin, director of operations for Cox Regional Services.

Griffin said in fiscal '99, Medicare represented about 26 percent of total billed charges and Medicaid accounted for 17 percent of billed charges for Cox clinics.

That means 43 percent of business was concentrated in those social programs, representing about 50 percent of patients, he said.

Medicaid and Medicare programs reimburse physicians on a fee schedule. Medicare reimbursement is based on the resource based relative value system, RBRVS. RBRVS assesses what level of resource is needed from a human resource perspective, from a clinic operations perspective and from a risk exposure (malpractice) perspective.

Generally, the more specialized the care, such as surgery, the lower the percentage of physician fees paid by Medicare. For instance, in the Cox system, primary care services are reimbursed at an average of around 85 percent while physician fees for specialty services are compensated at only about 50 percent. Those losses must be written off.

For Medicaid, reimbursement is about 75 percent for primary care services and 40 percent for specialty care at Cox. The physician must either write off the remainder or bill it to the patient, in which case supplemental insurance may pick up the slack.

Shrinking reimbursements are causing physicians to examine methods to increase revenue and cut costs without compromising patient care.

Physicians are having to do more to break even, Griffin said. That means seeing more patients. But in order to do that, they must streamline operations and create more efficient processes so they can fit additional patients into their schedules.

There are many issues to consider in achieving efficiencies. "How do you share services? How do you complement each other through clinics? How can you use staff, whether a certified staff person, licensed nurse or nurse practitioner, to provide more services to more people?" Griffin said.

Even with improved efficiency, larger patient loads will likely cause delays for patients and reduced physician availability nationwide. As a result, patients' choice of physician may be more limited, he said.

He added he believes Medicare and Medicaid can be fixed, but it will require a complete change of philosophy.

"If Medicare and Medicaid were to appreciate the need for prevention and wellness, and reimburse it fairly, then I think it would go a long way toward enhancing the reputation of the two programs," he said.

He added that data he has seen indicates a $1 investment in wellness saves $7 in future health care expenses.

"If they would cover wellness and prevention, I think Medicaid and Medicare could be expanded to cover more of the uninsured and underinsured ... the 30 some odd million, not necessarily those between jobs, but those who truly self-pay and don't get a lot of care they need because they can't afford it."

Meanwhile, if the trend of shrinking Medicare and Medicaid reimbursements continues, the results won't be pretty.

If real fixes do not take place, a likely result is that some of the nation's physicians will abandon the programs rather than absorb the costs. Those who stick with the programs will be scrambling to see how they can do more for less, Griffin said.

"That's the negative side of managed care that's on the horizon," he said. "We could force ourselves into a managed care environment that has all the negatives of managed care instead of the positives."

Instead of wellness and prevention, and keeping decision making in the hands of doctors, there will be forced formularies, forced utilization review and rationing of services, Griffin said.

"No one's going to be happy in a system like that," he added.