Doctors Cut Back on Seeing Medicare Patients as Another Pay Cut Looms

Will his independent practice be able to survive another Medicare payment cut? That's what Terre Haute, Indiana internist Pardeep Kumar, MD, wonders each day as the next round of cuts looms.

"We have to see," Kumar said in a phone interview. "We have around 40% of the population of patients that are on Medicare ... Our overall ability to sustain as a private practitioner is significantly under distress because of these cuts."

Can We Stay in Business?

Kumar and his wife, who is also an internist, are in private practice together, and each has taken on outside work at various points in order to keep the practice viable, he said. "I used to be the director of a hospice company outside the practice, and I also [work at] another hospital for geriatric psychiatric patients. I go and see them so that we have additional revenue to sustain our practice."

CMS is proposing a 2.8% cut in the Medicare fee schedule for the 2025 fiscal year, which would, if approved by Congress, come on top of a 1.69% cut in 2024. Often, Congress reverses the cuts, although this year they did so only partially. The cut is currently in limbo -- along with the rest of the federal budget -- now that Congress has passed a short-term budget deal keeping the government funded at current levels through mid-December, after the election.

Doctors' groups such as the American Medical Association, to which Kumar belongs, argue that instead of cutting doctor pay, CMS should adopt an inflation-adjusted reimbursement model. "When the cost of living goes up, there should be some [similar] adjustment in the physician reimbursement model," Kumar said. "That will provide sustainability, especially for the private practice."

Helping private practices stay in business, rather than forcing doctors to close their private practices and work for hospital systems, "will actually eventually lower the cost of care ... because reimbursement in private practice is relatively lower than hospital-based [reimbursement] so there's a cost saving for health insurers," including Medicare, said Kumar.

Although there is some movement in Congress toward site-neutral payment, in which hospitals would get the same pay as private practices for providing the same outpatient services, "hospitals are fighting that, because they are saying that they are employing more and more physicians now ... They're getting site benefit from that, and they're able to pay the physicians to keep them employed," he said. "I also sit on the hospital board here, and they are saying their margins are very shrunken and they will not be able to sustain or at least employ as many physicians if they [institute site-neutral payment]."

Primary Care Shortage Persists

Donaldo Hernandez, MD, a hospitalist in Santa Cruz, California, has seen first-hand how continued Medicare payment cuts are keeping patients from getting care. "Central and northern California can be somewhat expensive places to conduct healthcare business for a number of reasons," Hernandez said during a telephone interview at which a press person was present. "Even prior to the pandemic ... it was really the commercial marketplace that allowed medical practices that have enough money to invest in staff and all the other things that they do to maintain themselves."

"As we emerged from the pandemic, with the inflationary pressures exerted by the pandemic and the ongoing issues with hiring staff and sundry other things that occurred -- such as increases in the cost of electricity, for example, from Pacific Gas & Electric -- those pressures really were exerted on medical practices to a much greater extent," said Hernandez, who is immediate past president of the California Medical Association.

Doctors "really want to see this Medicare population, and yet the economics really forces physicians into sort of a Sophie's Choice between, 'Do I see these patients because I want to, and I know they have a need, or do I save my practice from financial uncertainty and the challenges that exist in me being able to hire MAs [medical assistants], back office people and [deal with] all the administrative burdens that are inserted on all medical practices?'" he said.

Hernandez recalled a recent patient he had seen at his hospital for a severe hypoglycemic episode; the patient -- who had recently moved to California from Oklahoma to care for her ailing father-in-law -- had been in 2 weeks before for a myocardial infarction. "That was treated, managed, and she was placed on some new medications in order to manage that particular medical problem, and was told to follow up with her doctor," he said. "Well, it turns out she really didn't have a community doctor that was managing her problems. There was nobody managing those [medication] alterations in an effective way in the outpatient setting ... As a consequence, she took her diabetes medications erroneously, and ended up having low blood sugar."

"The challenge for me was that day and the following day was to try to find her someplace that she could get follow-up," said Hernandez. "I had two social workers working on it for 48 hours to try to find her a medical home, including within our safety net system, who at this time isn't taking you Medicare patients because they're at capacity." He finally called in a favor with a doctor he knew personally, and was able to get the patient into that practice.

"That's what we're seeing throughout the state, is physician practices are just not able to take these new patients on," he added. "With every subsequent cut or pullback ... It continues to be, in my opinion, an ongoing risk factor for these patients moving forward."

A Personal Effect of the Shortage

For Rene Bravo, MD, a 65-year-old pediatrician in San Luis Obispo, CA, the cumulative effect of the previous Medicare cuts hit him very personally. He had had private health insurance for himself and had gotten care without a problem, "and I finally went on Medicare and tried to find a physician," Bravo said in a phone interview. "I couldn't find one -- they were all either full up or not available ... I finally found an internist who took Medicare, but I had to pull some strings."

"If I have trouble finding a physician, what's going on for other folks in the population?" he said. "The fact that these reimbursement cuts are coming -- everybody is aware of these things, and it just creates a profound amount of insecurity in the system."

"This has got to be fixed once and for all," Bravo said. "The Medicare payment system needs to be significantly revamped because this is creating a lot of stress on healthcare provision for seniors. There's nothing about this that is right."