Why Your Medicare Payments are Shrinking

If you're like the rest of us, the word "Medicare" has become synonymous with some level of frustration and concern.  Whether due to ever-increasing regulation, burdensome rules regarding documentation, confusion over proper coding, patient visit caps/screens, the transition to electronic health records, tracking quality measures, or the specter of post-payment audits and fund recoupment, Medicare has become anything but a term of endearment.Compound that frustration with an already paltry fee schedule that is taking an additional beating from several potential leeches, and an ever-increasing number of providers are wondering if it's even worth it all to see Medicare recipients.

This year, once standard and individualized fee schedules were released, many were in for a surprise. After some optimism about a slight decrease due to recalculation of conversion factors, many were brought back to reality as they saw their expected fees pecked-down by a variety of penalties, and further insulted by the ongoing sequestration-based pay cut.

What's Attacking my Payments?

A number of factors are at play regarding what "trickles down" to become your final payment.  Let's take a look at each individually:

• Fee Schedule  Let's start with the basis.  While we have dodged scheduled annual decreases to Medicare physician fees based on the outdated Sustainable Growth Rate (SGR) methodology, we have also not appreciated an increase in our allowables in a while either.  (blame the formula, the economy, and the past year's expenditures for that...)  Meanwhile, the costs of doing business continue to rise, making consistent reimbursement rates less valuable over time.  So, this baseline is essentially as good as it gets right now...if you're getting the whole thing.  While the SGR remains in effect, we can expect to consistently see a level fee or an annually-scheduled decrease based on all the factors that make the SGR what it is.  In my opinion, it's a self-fulfilling prophecy that seems, in most instances, to achieve just the opposite of what it has set out to.  Every year, we hear that congress fights to stave-off the scheduled decrease, but it doesn't disappear.  Oh no, it's still there in the form of an ever-inflating, "down the road" bulk decrease that has currently ballooned to 20.9%, and set to happen on April 1.  If congress beats this one back (as we expect they will), the issue will again arise this time next year, and the number will just be bigger.  The only way around that is to scrap the SGR computation system altogether and come up with something a bit more realistic as a fee calculation method.  While that solution may sound simple and effective, it can be anything but.  Changing the payment methodology also would require an overhaul of the federal budgeting process for Medicare, and even more likely would raise the overall annual Medicare expenditure amounts (which already compromise nearly 15% of the entire federal budget!).  The other general option would be to find more cuts within the system to offset what would likely be an across-the-board fee increase.  Very few find that a palatable side-effect.
• Electronic Health Records  Early on, the adoption of federally-approved electronic health records (EHR) and demonstrating meaningful use was incentivized to encourage and motivate providers to begin using EHR.  Now the incentives are phasing out and penalties for non-compliance are being applied.  In 2014 and 2015, the penalty for not demonstrating meaningful use were 1%.  Moving forward, that percentage is schedule to go up each year by 1% beginning in 2016.  Some offices have felt that 1% was a small price to pay when compared to the cost and time-consumption of adding an EHR system, but 2-3% may be a little harder to swallow moving forward, especially when added to other penalties the provider may be eligible to receive.
• Quality Measures Reporting  Medicare is growing increasingly dependent upon data gathering and interpretation to determine appropriate payment and quality of care.  One fairly new method they currently employ is the tracking of "quality measures".  Quality measures are specific tasks, procedures, or measurements selected by Medicare as markers of quality care when acknowledged as performed by providers.  Specific measures are signified by the submission of unique codes included on the claims on a given date of service.  Chiropractors were late arrivals to the party, relative to invitation/encouragement to report quality measures, and have been quite slow to adopt so far.  Early in the program, the reporting system in Medicare was called the Physician Quality Reporting Initiative (PQRI) and some incentive was offered for those who successfully reported within the mandated threshold.   The program has evolved over the years, and the suggestion or recommendation by Medicare to begin reporting quality measures has evolved to what amounts to a mandate.  The "initiative" has been removed from the name and replaced with "system" (now PQRS) and instead of incentive being offered for performance, "negative adjustments" (penalties) are being taken from Medicare payments for failure to successfully report quality measures. Beginning in 2015, a fee reduction of 1.5% for having not successfully reported in 2013.  Failure to have reported in 2014 will result in a 2.0% decrease in 2016. Failure to report in 2015 will result in an unannounced decrease in 2017, but the suspicion is 2.5%.
• Sequestration  As required by law, President Obama issued a sequestration order on March 1, 2013. Under these mandatory reductions, Medicare physician payments  and PQRS incentive payments have been reduced by 2%. This 2% reduction affected PQRS incentive payments for reporting periods that ended on or after April 1, 2013. So, even if you met all the standards for EHR and PQRS, you will still be receiving 2% less than expected for both your normal Medicare fees and ALSO your PQRS incentive payment for performing in 2013!

So What Can You Do About it?

The (over) simple answer is to simply look at the penalties you currently incur (and those you may be scheduled to incur in the future) and determine their impact on your cash flow. If you find them to be substantial, change the things you can to fix the issues you have. 

• In other words, start scouting out a certified EHR that suits your needs and your budget and begin learning the steps to attestation for meaningful use.  If you already have one and have not attested, there's no time like the present to begin a more robust adoption of your system.  

• If you don't currently report quality measures under PQRS, educate yourself and begin the reporting process so you can be sure to meet the threshold for this year and avoid penalty in 2017.  

With regard to the government-based fee reductions (SGR and the sequestration) you have a little less control but you're not helpless and you're not alone.  First, if you have not established a relationship with your local congressman and your two US senators, do so as soon as possible.  Communicate with each of them regularly regarding not only the SGR's effects on your livelihood and your ability to render quality care to Medicare recipients, but also as an inroad to discuss expansion of chiropractic services under Medicare to bring the profession up to speed with ALL the other professions who are paid based on their scope of practice and not a restrictive and archaic rule set.

The sequestration is not something you can effect.  It is law, and it is unlikely to be changed.  However, it is set to expire in March, 2016.

***As a side note (and an important one, in my opinion) I strongly recommend you don't look at PQRS reporting solely as a financial benefit/punishment avoidance issue.  Quality measures have been in play both within government and commercial payer systems for quite some time now.  The fact that the chiropractic profession is just now becoming aware of their usage is notwithstanding.  It is inherent upon us as a profession to put our money where our collective mouth is, and report quality measures to live up to the claims that our care quality is high.  Future pay models will be evolving away from fee-for service (more fees performed=more payment) and toward a quality based-model.  Commercial carriers are soon to require quality reporting by chiropractic physicians as well, and their payment schemes are also evolving and migrating toward "pay for performance" which will revolve around some form of quality care determination.  The time is now to evolve towards a quality-based, evidence-directed practice model. Those who are familiar with such concepts will find an easier time adapting to what many believe will be rapid and tumultuous change in the healthcare payment environment.