Unbiased Analysis of Today's Healthcare Issues

Why Doctors Don’t Like Medicare

Written By: Jason Shafrin - Jan• 03•12

Being a doctor is difficult.  You need to graduate from medical school and learn a ton of difficult scientific concepts.  You need to stay up to date on the latest medical developments.  You need to cater to sick, needy patients (and their family).  Any you need to get paid.

Earning a living is not as simple for doctors as other professions.  Sure doctors make a lot of money.  But knowing how much they get paid for a particular service is complex.

I provide an overview of the physician reimbursement system here.  That overview does not take into account all the payment modifiers in the Medicare’s physician reimbursement system.  Consider the following payment modifiers:

  • For many procedures, Medicare pays providers for the professional and technical component.  The professional component is the physician’s work and expertise; the technical component provides reimbursement for equipment and supplemental staff needed to perform the procedure.  If the procedure is billed globally, then the physician receives both components.  If another entity performed the technical component, then the physician is only paid for the professional component.  For instance, for lab tests, the lab may run the test (technical component) but the physician would be the one interpreting the test (professional component).
  • If you assist in a surgery, you receive 16% of the fee the primary surgeon does.Under some circumstances, the individual skills of two surgeons are required to perform surgery on the same patient during the same operative session.  If you are a co-surgeon (rather than an assistant at surgery), you receive 62.5% of the typical reimbursement for that surgery.
  • If you perform a bilateral surgery–a surgery done on both sides of the body (e.g., right arm and left arm)–then you receive 150% of the payment you would have received from doing a unilateral surgery.
  • When multiple procedures are performed through the same endoscope, payment will be made for the highest valued endoscopy (100% of the allowance) plus the difference between the next highest and the base endoscopy.
  • If you perform multiple surgeries in the same day on the same patient, you do not get paid the same amount as if these were performed on multiple days.  The highest valued procedure is paid 100% of the allowance.  For the second through the fifth highest valued procedures, the physician receives 50% of the typical payment amount.
  • If you are a physician assistant, nurse practitioner, or a registered dietitian or nutritionists; you receive 85% of the payment an MD would receive for performing the same service.
  • If you are a clinical social worker, you receive 75% of the payment an MD would receive for performing the same service.
  • If you are a certified nurse midwife, you receive 85% of the payment an MD would receive for performing the same service.  If you are a midwife, you only receive 65%.
  • Participating providers receive the full Medicare Part B allowed amount as payment in full for services and bill the beneficiary only for any coinsurance or deductible that may apply. Payment for nonparticipating physicians (i.e., those who have not signed a Participating Payment Agreement) is 5 percent below the Medicare Physician Fee Schedule amount, but these physicians are permitted to bill patients up to 15 percent in excess of the fee schedule amount.

If you don’t think Medicare is bureaucratic, just take a look at those rules.

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7 Comments

  1. Cort says:

    Can you compare the bureaucracy of Medicare to the commercially insured world?

  2. shana says:

    Similar to Cort’s comment, much of this bureaucracy is also present in the commercially insured world. I see little difference between the two.

    Commercial insurance splits payments for the professional and technical components. I don’t have any summary plan descriptions with me at the moment, but off the top of my head, I’m pretty sure that assistant surgeons get 20% in the commercial world. Multiple surgery reductions occur, co-surgeon payment reductions occur, physician assistant and midwives all get paid less than MDs.

    I think that it’s fair to say that the entire system is bureaucratic, however Medicare is no more bureaucratic than commercial insurance.

  3. Aaron says:

    The insured world reflects CMS rules. Remember, CMS is the largest payor in the US. They set the basis for the rates and also determine coding procedures.

    The health insurance companies would be a CMS in a parallel universe that worked well and made money.

    I do not defend insurance companies on a regular basis, but CMS made the system bureaucratic. Before CMS, the healthcare system was mainly cash and out-of-pocket.

  4. FollowHealth says:

    I have to agree with both of the previous comments, Medicare sounds no less bureaucratic than commercial health insurance already is.

    This is definitely one of the better summaries I have seen of the payment modifiers though – thanks for sharing.

  5. [...] Medicare, that is. This is courtesy of Jason Shafrin who has a terrific blog called the Healthcare Economist. As for what follows, I don’t know whether to laugh or [...]

  6. Cort says:

    I don’t understand how your post supports your thesis that doctors don’t like Medicare. It seems reasonable that people who go to school for a decade and go through residency should get paid more than people who have a masters or bachelors degree. If the percentage seems too complicated, I suppose you could have a different fee schedule for non-physicians. Unfortunately that is more complicated and not less.

    The different levels of payment based on participation in the surgery seem reasonable to me. If you are assisting, it doesn’t seem fair that both surgeons receive the same reimbursement. If you are doing the same surgery bilaterally, it seems fair that reimbursement isn’t 2x. There is time spent in preparing for the surgery that is the same whether there is 1 or 2 sites of surgery.

    Now if you said doctors don’t like Medicare because
    the reimbursement is lower than other payors,
    the “doc fix” is a political football adds uncertainty to their business
    the effort required to receive proper payment is different than other payors

    I could agree those are places to target for improvement in the Medicare program.

  7. This article is a prime example of the things that doctors face in their profession and the attitude that this can lead to. It truly is difficult these days to be a medical doctor, and while people in most other professions feel that doctors shouldn’t “make a fuss” because of how much they get paid, the truth is that there is more to a job than just compensation. Doctors who feel they are overwhelmed by government entitlement billing rules are speaking up, and all over the country, people inside and outside of the healthcare system are finding out that the medical billing industry as a whole is too complex for many physician practices to handle confidently. It’s not just Medicare and Medicaid: even collecting from insurance companies and patients has its own set of very challenging obstacles. That’s why many doctors choose to get help from outside firms or hire additional staff just to get billing and collections under control. Ron McLaughlin, CEO, http://www.RMK123.com.

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