CMA has published a checklist to help physicians assess the impact the impending Medicare payment cuts will have on their practices. It is important that physicians understand how these cuts will affect their bottom line so that they can make informed decisions about Medicare participation for 2007.

Assess Economic Impact of the Cuts on Your Practice 

• Determine Your Payor Mix: The first step is to complete an internal analysis of your payors to determine your Medicare claim volume. Use CMA’s “Utilization by Payor Class” worksheet.
• Identify Your Top 20 CPT Codes: Next, calculate the financial impact the Medicare payment changes will have on your practice, based on your 20 most commonly billed CPT codes. (See the comparison of 2006 and 2007 payment rates by CPT code.) You may have seen in previous issues of Alert a chart that shows the average impact of the cuts by specialty. However, since every practice is unique, identifying your top 20 CPT codes will give you a better idea of the actual impact of these cuts on your bottom line. Use CMA’s “Medicare Financial Impact” worksheet.
• Calculate Change in Practice Costs: These latest Medicare rate cuts come at a time when medical practice costs are soaring. Over the last five years, the average cost to run a medical practice has gone up at least 18 percent. Use CMA’s “Cost Analysis” worksheet to determine anticipated increases to your practice costs for 2007.

Make Medicare Participation Decision
Using the data that you have collected, determine whether it is financially viable for you to continue seeing Medicare patients.

Physicians have three choices regarding Medicare: be a participating provider; be a nonparticipating provider; or opt out of Medicare entirely.

• A participating physician must accept Medicare allowed charges as payment in full for all their Medicare patients.
• A nonparticipating provider can choose to accept or not accept assignment on Medicare claims on a claim-by-claim basis. If you choose not to accept assignment, you can charge the beneficiary up to 115 percent of the amount allowed in the nonparticipating physician fee schedule (also referred to as the “limiting charge”). The nonparticipating physician fee schedule amounts are 95 percent of the participating physician fees. Therefore, a nonparticipating provider who does not accept assignment can charge 109.25 percent (95 percent x 115 percent) of the amounts allowed in the participating physician fee schedule.
• Physicians who opt out of Medicare are bound only by their private contracts with their patients. Medicare’s limiting charges do not apply to these contracts, but Medicare does specify that these contracts contain certain terms. When a physician enters into a private contract with a Medicare beneficiary, both the physician and patient agree not to bill Medicare for services provided under the contract. Once you opt out, you cannot opt back in for two years.

For more information on your participation options, see CMA ON-CALL document #0151, “Medicare Participation (and Nonparticipation) Options.” ON-CALL documents are free to members at the members-only website. Nonmembers can purchase ON-CALL documents for $2 per page in the CMA bookstore.

Review Private Payor Contracts
CMA also encourages physicians to review any of their private payor contracts that tie their payment rates to Medicare. CMA has sent a letter to all major California payors urging them not to adopt the 2007 Medicare fee schedule changes that will negatively impact physicians. CMA has asked the payors to notify CMA as soon as possible if and when they plan to adopt the 2007 Medicare fee schedule changes so that physicians can assess the value of these contracts to their practice.

Tell Congress to Stop the Cuts
Physicians are urged to contact their members of Congress and tell them they must stop the 5 percent SGR cut. Call AMA’s grassroots hotline at 800/833-6354, enter your zip code, and you will be automatically connected with your member of Congress.

For more information, see the Medicare Action Center.