How to Make the Most of

2011 Medicare Reimbursement

Every summer, medical practice office managers as well as physicians anxiously await the release of Medicare reimbursement rates for the following year. While reports leading up to the big reveal usually let them know which way the scale will be tipping, in these tough economic times financially based predictions are something of a carnival game.

Even if the medical practice has a very low Medicare patient base as a whole (think: Pediatricians or Pediatric Sub-Specialties), many payor contracts utilize a Medicare based schedule. For instance, your contracts may provide for Medicare + 10% or something along those lines. Thus, even those contracts will be affected by fluctuating Medicare rates.

In very early 2010 Medicare Payment Advisory Commission (more commonly known simply as MedPAC) recommended to Congress a one percent increase in Medicare physician reimbursement. At first blush, this seems like a very low figure especially when you consider the cost of living yearly increase is at least triple that amount.

Thus, depending on Medicare alone to float the budget of an individual medical office is not sage financial advice. While it is true that the economy is rebounding, once Medicare rates are secured for 2011 medical offices will be stuck with those figures for 12 full months. Further, Washington lobbyists who advocate for the best interest of physicians will continue to assert that Medicare reimbursements are sub-par but even those efforts are bigger picture and will not affect your A/R in the next quarter.

As a physician practice you need to get creative with ramping up income as a way to mitigate any low Medicare rates that apply to your practice. The easiest way is to renegotiate your payor contracts. If your current contract is Medicare based, appeal with the payor to move instead to a standardized fee schedule.  Some of the larger groups such as Blue Cross/Blue Shield utilize this methodology.

If you are paid via capitation, you need to make certain that the payor shows you each year what you are making as compared to Medicare. In many cases, the HMO or medical group will provide standardized reports showing the value of services the practice provided (typically affixing a Medicare rate) and compare that to capitation paid.

Be sure to look at these reports carefully and be certain that your office is being paid the capitation dollars that it deserves. If you are falling at or below Medicare then it is time to hit the table for a serious negotiation session.