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Why Medical Providers Hate Medicare

Last update on: Feb 02 2017

I hear regularly from readers that it is difficult for Medicare beneficiaries to find new doctors or make nonemergency appointments. The reason is the way Medicare treats medical providers. Doctors are part of the story. Their reimbursements have been reduced over the years, though there’s an annual budget maneuver to prevent the reimbursements from declining as far as they’re scheduled to.

This article gives an example of how other medical providers, particularly testing companies, also are treated. Medicare, after receiving complaints from private insurers, decided its reimbursement formula for certain types of tests was wrong. But it didn’t wait until it figured out a better way to reimburse. Instead, it simply stopped reimbursing testing companies until it comes up with a new formula. The companies in the meantime must survive without revenue. Expect more of this type of behavior as the Affordable Care Act of 2010 is implemented.

The private health plans could have fixed this on their own, by demanding that labs provide more information. But many health plans, looked to Medicare to fix the billing system. Under pressure, the agency said it would develop a new scheme.

The prior payment system was far from optimal. But so is Medicare’s approach to replacing it. Moreover, under the new payment schemes, even when Medicare starts to pay its bills again, the rates for individual tests are likely to come down. That was the overriding impetus for changing the scheme in the first place – to save the government money. It’s another reason why big lab companies that make a lot of their margin on the complex, molecular tests could get pinched going forward.

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