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The math is simple for physicians; starting in 2008, Medicare will cut physician payments by 10 percent. Hospitals will also be affected, though to a lesser extent.

The American Medical Association (AMA) and the Arkansas Medical Society both believe that this cut will lead to doctors in Arkansas not accepting any more new Medicare patients, a potential problem since Medicare covers more than 400,000 patients in the state.

“One of the most disconcerting things is that Arkansas has a huge Medicare population,” said Dr. Brenda Powell, president of the Arkansas Medical Society, at a press conference held in conjunction with the AMA. “Seniors in Arkansas cannot afford to lose their doctors.”

Powell added that the state averages about 12 physicians per 1,000 Medicare patients, and that was one of the lowest ratios in the United States, where the national average is around 20 doctors per 1,000 Medicare patients.

The first stop of the AMA’s press tour was in Arkansas. In a press release, the AMA showed a survey of 9,000 physicians nationwide: 60 percent of doctors asked said they would begin to limit new Medicare patients.

For some in Arkansas, this is already the case.

Dr. Stephen Magie, a Conway ophthalmologist and a trustee of the Arkansas Medical Society said he was familiar with doctors in Arkansas who were already cutting back on new Medicare patients.

And the 10 percent cut is just the beginning; Medicare funding is expected to fall over 40 percent spread out over the next nine years.

AMA board member Dr. Ardis Hoven of Kentucky related the cuts in real money:
“Arkansas physicians are going to lose about $63 million in healthcare funds that are in use to treat seniors in 2008 unless something is done to correct this.”

The cuts would depend on each doctor’s practice, so some may not see such a dramatic reduction, but on the whole, all Arkansas physicians would feel them.
The AMA’s goal, in conjunction with the different states’ medical societies, is to let the federal government know what kind of impact the cuts could have.
“Congress has been dealing with this now for some time, and in many ways they’ve been patching it over the last five years,” Hoven said. “We have to quit patching and quit kicking the can down the road and deal with this in a reasonable way, get this flawed payment formula changed.”

Change is also in the air for reimbursement rates for hospitals, with the federal government proposing a modest increase. How much depends on whom you ask.

The increase for hospitals is set for 3.3 percent, but some argue that it is actually only 0.9 percent.

The Centers for Medicare and Medicaid Services (CMS) administer the payments for hospitals, and they are instituting what they call a “behavioral offset.”

CMS assumes that the hospitals will be more efficient in billing and coding, and that explains the changes, the most extensive to the Medicare payment system since 1983.

In hard numbers, CMS said that hospitals would receive nearly $3.3 billion more next fiscal year than they did this year and that to call it a cut is a “terrible mischaracterization.”

The new rules are set to go into effect in October and reflect the diagnosis-related groups (DRGs) that hospitals use to bill Medicare.

Currently the system has 538 DRGs, but that number will change to 745. The expansion in categories will allow the hospitals to be more specific in what is wrong with each patient, and Medicare will pay more for the severely ill.
The behavioral offset comes into play after the experience CMS had in Maryland where Medicare saw higher bills from supposedly sicker patients.

But the American Hospital Association says that the DRG coding system has been in use for decades and that CMS will actually cut the amount paid to hospitals to the tune of nearly $2.5 billion. The group thinks it would be better to make adjustments if the billing does actually rise, rather than make adjustments based on CMS gazing into a crystal ball.

With the proposed changes, the hospital association says the cuts actually give a reason to bill at a higher reimbursement, making CMS’s best guess a self-fulfilling prophecy.

Covering the Uninsured
The uninsured and underinsured are hot topics in the healthcare world, especially after the release of Michael Moore’s documentary, “Sicko.”
But in Arkansas, at least, some are trying to fill that gap.

The Healthcare Leadership Council recently honored the Arkansas Chamber Alliance Program (ARCAP) in its efforts to insure small-business groups in central Arkansas.

Arkansas Sen. Blanche Lincoln (D) was the keynote speaker at the luncheon hosted by the North Little Rock Chamber of Commerce, the group that has partnered with QualChoice of Arkansas to offer the program.

“This program should serve as a model for other chambers and organizations across the country,” Lincoln said.

Brian Feldman, regional director of the Healthcare Leadership Council, said, “We try to then take them and some of the other folks who have been honored to Washington and have them talk to members of Congress from other parts of the country” to inspire others to replicate the program.

Roy Lamm, an executive with QualChoice, said that about 2,000 people are now insured under ARCAP.

“Some are small businesses where they weren’t able to offer insurance to their employees before,” Lamm said. “And some are businesses where they are now able to offer insurance to more of their employees.”

One such example was Kelcro, Inc., a company that was represented by Vanessa Crossfield at the luncheon.

“With (Crossfield’s) company, they went from offering insurance to 20 of their employees,” Lamm said. “Now they offer insurance to 50 of their employees and for less than it was for their 20 employees.”



August 2007

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