2/28/1988. I’d like to quote Dr. Jeffrey K. Pearson, one of many, many doctors who have complained about Medicare to no avail.
“In some states, a physician’s license is predicated upon his decision to accept insurance assignment as payment in full. Every day, I thank the heavens that New Jersey hasn’t passed such a law yet.
“How does assignment work? Let’s say that I perform a typical nursing-home visit, including a physical examination, review of pertinent charts, and state-mandated paperwork. My fee for this is $45, but the federal Medicare program says that a ‘reasonable charge’ for this service is only $16.40. If I accept assignment, I’m telling Medicare that I’ll accept the $16.40 as payment in full.”
The catch-22 is that some doctors have to accept these fixed prices or not get licensed. Medicare effectively has price controls.
“What often confuses patients is that Medicare will pay only 80 percent of what it deems reasonable. Therefore, it will pay just $13.20 of the $16.40. This $3 difference is to be made up by either the patient or a private insurance company. We, as physicians, are required by law to bill patients for this difference when we accept assignment. Otherwise, we could face charges of Medicare fraud.”
Medicare turns the doctor into a peon and creates friction between patients and doctors. “I can’t tell you how many irate phone calls I get because I bill patients for such piddling sums.”
The price controls cause doctors to stop providing services:
“Many physicians no longer wish to treat nursing-home patients for only $16 per visit. Although I’d be very popular if I’d accept assignment on everybody, I couldn’t afford to keep my practice going. (Incidently, state Medicaid pays only $9 per office visit. For all of the time and paperwork involved, we usually lose money treating these patients. That’s why most doctors don’t accept Medicaid.)
“Most of the ‘reasonable charges’ that Medicare lists are ridiculously out of date. While my rent, malpractice insurance, and overhead costs keep rising, Medicare reimbursements haven’t kept pace. Neither is there any logical consistency among charges.”
“A typical basic visit in my office costs $35. A comprehensive office visit is significantly longer and more complex; I charge $75. Now look at what Medicare says: Its maximum allowable charge (MAAC) is $30.30 for a basic visit. And the MAAC for a comprehensive visit is only $28.28 — even less than my basic-visit fee.
“When my office asked Prudential Insurance Company (the Medicare carrier in New Jersey) about this, we were told to manipulate the codes in order to get the proper reimbursement. Why should I lie to Medicare?”
Doctors have to lie and commit fraud to make up for outdated Medicare price controls.
“Most of us who deal with Prudential [Insurance Company] on a regular basis have serious doubts that even the bureaucracy behind Medicare has any understanding of the system. The lists of absurdities and inconsistencies are endless.”
This is known and has been well-known since the above was written in 1988. Yet Medicare grinds on, like the War on Drugs drags on and now the War on Terror drags on. Why? My next post offers a new perspective on that.
