Reimbursement short falls from public health programs

Doctors, hospitals and outpatient surgery centers get paid via a "fee schedule" by private insurance as well government programs. There is a list of procedures and a set payment for each procedure as well as certain pieces of equipment. On the whole doctors feel that the government programs short change them on reimbursements - the evidence shows that they are correct. What they are paid per procedure does not cover the cost of the procedure - it's not hard to see that this is a significant financial issue for doctors and their medical institutions. You can't expect people to take a bath financially on services for the elderly or the poor. They will simply stop providing service to those individuals. I've seen it happen with doctors I worked with and lobbied on behalf of. Prominent health care consultants The Lewin Group analyzed the various proposals for reforming health care in Colorado and found that in Colorado "Medicare pays an average of 75% of costs and Medicaid pays an average of 65% of costs" - Source (pdf, page 24).

Today the L.A. Times comments on fee schedules being reduced in California,

After San Diego ear, nose and throat physician Ted Mazer recently billed the state's medical insurance program for the poor for a tonsillectomy, he got a check for $168, too little to cover surgical costs. The balance came out of his pocket.

Now legislators have cut the rates even further, leaving Mazer resolved to shut his doors to new Medi-Cal patients. Almost every other specialist in his field countywide has already done the same, he said...

Reimbursement rates, doctors say, already are so low that a patient office visit nets only $24. Some clinics say the numbers simply don't work anymore. The result: Thousands of patients guaranteed healthcare under state law can't get in to a doctor's office, so they don't go or they sit for hours in an emergency room...

Cutting those rates even further is not a long-term solution, administration officials said, but the only immediate alternative was worse: cutting hundreds of thousands of Californians off Medi-Cal and scaling back benefits for those remaining.

If a Democrat is elected President this fall the centerpiece of their domestic policy agenda will be a health care program designed to cover the 47 million uninsured. Obama and Hillary's programs are slightly different but both will involve a significant new public program as well as utilization of private insurers. In other words there will be more government fee schedules.

Passing legislation as monumental as what is being proposed by the Democratic presidential candidates will require significant coalition building. Doctors and hospitals will need to be on board with the program, not just advocates for the uninsured and other liberal interest groups. Given the political realities its time Democrats start discussing this real issue and ways to address it. If the new health care program is only going to cover 65-75% of costs the doctors associations and the hospital associations are going to walk away from the table and fight tooth and nail to kill the legislation.

This is reality and it needs to be dealt with. I haven't seen any real discussion of this issue anywhere among the health care reform advocates. I strongly support the reforms being proposed (though I prefer single-payer) but it's time we start talking about how we're going to address these reimbursement shortfalls