What you need to understand about Medicare cuts

Hearing about Medicare cuts causes a provider’s blood to run cold. Let’s look deeper – are they really cuts? Will you really lose money by seeing Medicare patients?

I am constantly asked “Should I opt out of Medicare?” and/or “Should I start or switch to a cash-only practice?” by NPs who are new to business and those who have been in practice for years.

Don’t get me wrong, they are good questions. And many have strong opinions on this. But before you think of not accepting Medicare in your practice, it’s wise to look deeper, especially in light of all the talk about the upcoming Medicare cuts in reimbursement.

While I have never before accepted a guest post to this blog, I’m doing so this time, because I think it’s important, and the topic is spot on to the questions NPs are asking.

I’ll also remind you to keep your eyes posted as Don does webinars with us a few times. a year, and the next one, our annual webinar on the upcoming CMS changes, is coming up on November 17, 2022. These webinars are free, and of course, replays are available when you register.

Now, let’s hear from Don.

by Don Self

For years, I have been teaching primary care providers that the traditional Part B Medicare patient is the most profitable of all patients they could see.   To me, the math is simple – the PCPS are getting paid about 4 times MORE money by Part B than they make on other younger patients if the practice is working smart.

It has seemed, though, that I am at odds with some national physician associations who like to point at one code or two codes to persuade their members they lose money, and they need to spend more on dues or lobbying with their association to “protect” them from the evil Medicare programs.

It is true, in my own opinion, that Medicare Advantage plans are not beneficial to the provider or the patient, but the opposite holds true for traditional Part B Medicare.  In fact, at 66 years old, I am a beneficiary of Medicare Part B and a Medigap plan.

Just yesterday, I had a Nurse Practitioner ask me if she should stop seeing Medicare patients with the 2023 CUTS that she is reading about in professional publications.  This is a perfect example of DECEPTION in my opinion.   Yes, the conversion factor is getting a 4.4% reduction, but many of the RVUs used in the calculation of the Medicare Physician Fee Schedule has increased.  Just in the WORK RVU, we are seeing increases on some codes of 12% (CPT 99308) or 20% (99233) or 32% (CPT 99316).   There are some that have smaller increases, so how does this all impact the actual amount that Medicare pays?  Most providers are clueless about this.

The Medicare-allowed amount is the lowest of either the billed amount or the MPFS.  You would be surprised how many providers retard their own payments by charging less than the MPFS!    The MPFS (Medicare Physician Fee Schedule is more than just the “conversion factor” or CF.  It is calculated by using the RVU (Relative Value Unit) amount for the Work, Practice Expense, and Malpractice Expense as well as the Geographical Practice Cost Indices for each of these 3 areas.   (Don’t get glassy-eyed on me yet)

So – what does this mean?   It means that it costs more to practice in New York City where the physician and staff may be paying $58 a day for parking than it does in Whitehouse, Texas where the parking is free, so the GPCIs change from location to location.    A clinic may be paying $8,000 a month rent for a small office in San Francisco while the rent on a small office in McCook Nebraska might be $700 per month.    These cost factors are part of the calculation.

So, yes, the conversion factor is having a 4.4% reduction to comply with Congressional mandates, but that does not mean that physicians or NPPs are going to see a decline in their payments.   In fact, based on the codes most used by some specialties in some locations, they may see a 5% to 8% increase in the actual payments.

So, why are medical providers believing the folks screaming the sky is falling?   Why are these same associations not telling the primary care providers working smarter instead of harder that they make 4 times more money on Medicare?   I have no idea.  Is it to get more lobbying money?  I hope not.

Don Self, CMCS, CPC, CASA has been a reimbursement consultant to tens of thousands for more than 37 years, author of several books and has taught more than 900 live webinars and seminars to national, state, and local associations.  His website has had millions of visitors since the mid-90s.

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