Medical Practice Management
Dec 20

Medicare Reimbursement Reprieve and REALITY

Medical practices are breathing a sigh of relief over Congressional action to postpone the anticipating 10.1% payment cuts that were set to begin next month; here was official word from MGMA:

The Senate late Tuesday Dec 18th passed the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007 (S. 2499). Today the House of Representatives also passed the bill which replaces the 10.1 percent reduction in Medicare Part B payments scheduled for 2008 with a six-month, 0.5 percent increase. The President is expected to sign this bill into law. Physicians will face a payment reduction in Part B payments in July 2008 unless Congress once again intervenes. The Medical Group Management Association (MGMA) is concerned about the uncertainty that the six-month extension will have on group practice operations.

If anyone thinks these cuts won’t ever happen, then pull your head out of your @#$$. They will eventually come unfortunately, which is why EVERY medical practice today must start to strategically plan for them. I have been preaching that practices who just “sit on their hands” are going to be in for a world of hurt and I still firmly believe that. So, practice leaders, sit down with your advisors and start deciding how these looming payments cut are going to be addressed.

To give you a little idea of what’s coming, the following was sent out yesterday by my good friend Frank Cohen (www.cpahealth.com):

I checked with an analyst at CMS and he assured me that, irrespective of the outcome in today’s vote on the CF for 2008, the BNA work reduction factor will be applied.  How it works is this:

When calculating the MFS allowable amount, the work RVU is first multiplied by 0.8806, rounded to two decimals and then multiplied by the work GPCI.  The work RVU makes up around 53% of the total RVU value for a procedure (a lot more for E/M procedures).  Factoring the work RVU by 0.8806, in effect, reduces the value of that component by around 12%. If the work RVU makes up 50% of the total RVU value, it reduces the MFS allowable for that code by 6%.  If the work RVU is 75% (as in several of the E/M codes), it reduces the MFS value of the code by 9%.  Either way, whatever the CF turns out to be, it is hiding a reduction overall.  Let’s say that they increase the CF to 38.08 this year.  That is an increase of 0.48. Even in the best case, this still results in a 5.5% decrease in what the MFS allowable should be.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →