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Medicare Cuts Delayed Again — PHEW

I had planned to log on and write a quick post reminding docs that they have less than a week to decide whether or not to remain a participating provider in Medicare in the face of 21% payment cuts — and to encourage docs to drop Medicare.

While perusing the morning news, I discovered that once again the Senate has made a last-minute decision to delay the Medicare pay cuts — this time until October 1, 2010. I’ll be linking back to my Brinksmanship article somewhere around September 15, 2010, I’m sure.

According to one Senate Republican, this means that the federal deficit will increase by $100 billion.

Wait. Seven months of foregoing 21.2% cuts to physicians costs the government an extra $100 billion.
That means that 12 months of foregoing cuts would cost $171.4 billion (divide $100 billion by 7, multiply by 12)

Dividing $171 billion by 21.2%, we get a total Medicare payout to physicians every year of $808.6 billion dollars.

Mrs. WhiteCoat gets paid about $70 for an average office visit for a Medicare patient – usually after having to pay her office manager for a couple of hours of time to figure out why Medicare refused to pay the first three times the claim was submitted. Let’s round up. Say Medicare pays $100 for an average doctor visit. Dividing $808.6 billion dollars total physician payments by $100 per doctor visit means that the total number of doctor visits – just for Medicare patients – is a little more than 8 billion per year.

Lets say that there are 50 million Medicare enrollees (these Kaiser numbers are from 2008, so I increased the estimate from 44.8 million to 50 million).

Eight billion visits divided by 50 million patients means that every single Medicare patient is seeing a doctor an average of 161 times per year – more than three times per week every week for the entire year.

Look at it another way. Dividing $808.6 billion by 50 million Medicare patients means that physicians are being paid an average of $16,172 each year for every Medicare patient in the country.

So what are all of us rich doctors complaining about?

How about politicians who are full of hot air.

Where’s the money really going?

No comments

  1. just curious…when a Medicare patient is hospitalized, what does Medicare pay the doctor for the hospital visits?

    • Midwest woman. The amount depends on the complexity of the case, but lests say you are in the ICU with pneumonia. The physician who is taking care of your gets to charge (99232)which is $53/day. This is the code for total care for that 24 period.

  2. Can you state which senator that was? I clicked on the link, but I don’t have a subscription to the site. Thank you.

    And yes I think this is ridiculous, I was planning on writing him/her to get him/her to explain their math (probably won’t but it’s worth a shot).

    And you forgot to take into account 3% for Medicare’s amazingly low administration fees ;)

    • The widely-quoted 3 percent Medicare administration cost is an accounting gimmick. For example, the cost of dealing with the Medicare tax dollars paid by employees and employers is not included. Due to the age of the patients, reimbursements are higher making the admin fees lower as a percentage. Also, the cost of dealing with the over 100000 pages of regs is pushed onto the Providers.

  3. I have a sub:
    “One of them — Sen. Jeff Sessions (R-AL) — warned that it would increase the federal deficit by roughly $100 billion.”

  4. As long as your industry continues to have to sweat out whether the flow from the government teat will keep going, you’re in a lose-lose position. The costs remain unsustainable, and you make more than your brethren around the world by a significant amount. The reckoning will come. If you don’t use this time wisely to get some real reform to your payment model, then you have only yourselves to blame if you’re not prepared when the inevitable cuts happen.

    • Matt:

      Times have changed. GPS in the UK make more than US pediatricians and family practicioners. Why we tend to make more is that most of us are still in small business and our revenue is based on the whole business. When that revenue is excluded, there is not that much of a difference. For what its worth. Us attorneys do far better than their overseas counterparts.

      • Do we? I have never seen a comparison.

        Here’s US physicians, broken down by specialty:


        Here’s UK:


        According to those charts, a UK family practitioner will make around $60,000 USD. Other than Ambulatory (?), the lowest average for US physicians OF ANY type was over twice that.

        I think someone’s misled you on how much UK physicians make. Unless I misread something, which is possible.

      • Matt:

        The US physcian tends to make more because they are a small business owner. They also work nore hours and see more patients. You are looking at government salaries. Also, they are comparing GPs to FPs. My data source is easy. I have worked in both systems. If you want to compare NHS salaries to US, you need to lool at VA or Indian Health Service salaries. There you will see you get paid more and work far less in the UK.

      • Throck,

        I’m not disagreeing with you. I’m simply saying your belief about what they make in the UK is incorrect. Those are averages based on salary surveys. You may be correct if in the UK if they were small business owners they’d make more. But for now the numbers are the numbers.

        My overall point is that you guys are asking for trouble continually hoping the government doesn’t cut your pay, especially when you consider how highly paid you are compared to your peers overseas.

    • Matt:

      I forgot to mention that in the UK you can see some private patients but it is limited. Here in the US if you are in private practice, how much you make is dependent on how much you work. When I was in the UK, the ORS were pretty much shut down by three in the afternoon even though there were waiting lists. Here, they are running at full speed.

    • Matt:

      Just for grins, check out http://www.singlepayerlegal.org

      I agree with you that we need an overhaul of our payor model. I personally believe that patients should be directly connected to the costs of their care and be responsible for getting reimbursed for their care and that medical providers should compete just as Wallmart, Target and GEICO do. Isolating patients from their healthcare dollars is like isolating them from their tax dollars. Both lead to huge deficits.

      • Those salary surveys are not reflective of most US physicians in private practice but rather derived from Medical Groups and other sources.

      • You know a version of single payer legal does exist right? Prepaid legal plans are out there, which is essentially insurance. And it’s quite a profitable insurance business.

        Doc99, if those salary surveys are incorrect, perhaps you can point to some other more accurate ones?

      • Matt,

        If you had looked a little further, salaries for MD’s in England who are in Private Practice or Self Employed start at 75,000 – 90,000 pounds, or at the latest conversion rate they get $112,500 – $135,000 US, and that doesn’t take into account where they work or years of experience. The same site also say’s ” The chart on Doctors’ Salaries in UK by Years Experience reveals that physician salaries can more than double over the course of 20 years.”
        Personally, I have a prepaid legal plan, and if it weren’t so inexpensive I’d drop it as they are willing to write a letter for me, make me a will, but not too much else. I can get hold of him by phone during business hours, but outside of that. But hey, you never know when you need a letter written or a new will drawn up.

      • Painless, you may be right. I’m just looking for a comparison. You guys keep telling me this stuff but no one has posted any apples to apples link.

  5. Hate to poke a hole in your math, but the TOTAL effect on the deficit of this bill is $100 Billion. There’s a lot more in this boll than the doc fix punt. According to the CBO score(PDF), the effect of the physician reimbursement fix on the deficit is $7.8 Billion. (It’s under Title VI, Sec 601 if you’re curious.)

    That’s gonna change your back of the envelope math quite a bit, sorry to say.

  6. By the way, the total cost of Medicare (Part A and B) is about $490 Billion annually. Part B — the physician part — is I think around $240 Billion in the current budget year.

    Wouldn’t it have been easier to Google this before putting embarrassingly wrong hypothetical numbers up there?

    • In 1947 Aneurin Bevan “stuffed the doctors’ mouths with gold” to win support for the NHS. I’d say the AMA has sold us short.

  7. Of course it’s a government operation. Everyone knows its not working and should be put down with a vicious beating from a rusty shovel, yet it lurches on and on. Too bad engineers are too smart to be politicians because at least we know when to put a failed project up on the shelf (except for the F-35, which is government funded).

  8. Just to be clear, actually the 21% Medicare cuts ARE still scheduled to go into effect on April 1, 2010. The Senate did pass a bill on Wednesday (March 10) to delay the cuts again until October 1, but the House hasn’t voted on it yet, and no one is quite sure when they will. Hopefully before they go on Easter break on March 26.

    But if the House doesn’t vote on that extension before Easter break, the cuts will technically be in effect on April 1. Unless they do yet another 30-day patch. Again.

    Good luck to physicians trying to make decisions on their practice, and to patients trying to find a physician who accepts Medicare.

  9. Erm.

    Correct me if I’m wrong, but you seem to be assuming that Medicare dollars are spent only on $100 office visits, with no money for testing, surgeries, medications, etc.

    $16K per year doesn’t seem an outrageously large sum to pay for medical care for a geriatric patient, especially considering that a large chunk of that is likely spent on the last year of life.

    That’s not to say that it’s a sustainable amount, or that we can’t reduce costs…

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