Should you participate in Medicare? Think carefully before deciding
Everyone knows that the Medicare fee schedule is typically lower than that of other payers. That’s why it’s not surprising that physicians often debate whether it’s financially viable to participate, meaning agree to accept Medicare’s allowed charge as payment in full. You technically have two other options: To become a non-participating Medicare provider (i.e., you can make assignment decisions on a case-by-case basis and bill patients for more than the Medicare allowable for unassigned claims) or become a private contracting physician (i.e., you agree to bill patients directly and forego any Medicare payments).
2023 proposed Medicare Physician Fee Schedule: Rethinking your strategy
In 2023, the question of whether to participate in Medicare becomes even more critical as CMS proposes additional payment cuts. In its 2023 Medicare Physician Fee Schedule proposed rule, the agency proposes a 4.5% reduction to the Medicare conversion factor and a 4% pay-as-you-go-sequester, resulting in a reduction of payments by at least 8.5%.
How might these changes affect your medical practice?
A recent Medical Group Management Association (MGMA) survey of 517 medical group practices found that physicians are taking the following steps to offset the reductions in payment:
Limit the number of new Medicare patients (58%)
Consider reducing charity care (66%)
Consider reducing the number of clinical staff (58%)
Consider closing satellite locations (29%)
However, none of these steps are easy, and each of them as implications for patients. That’s why it’s important to think through any and all decisions carefully.
Will you participate in Medicare? Consider these questions
Here are a few questions to consider when deciding whether you’ll continue to accept Medicare.
1. What is my current and future Medicare population? For some, choosing not to participate in Medicare would be financially detrimental because you know your medical practice caters to an older population that would not be willing to pay out of pocket. Or your medical practice caters to a lot of individuals who will soon become Medicare-eligible. Deciding to participate in Medicare means that although you may earn less money per patient, you’ll make up the difference through volume.
2. Is there the potential to earn bonus payments? With Medicare comes the potential for incentive payments when you opt into the Merit-based Incentive Payment System. This means in the long run, you have the potential to earn additional revenue beyond the fee schedule amount for each service you provide.
3. Can you hire a nurse practitioner or physician assistant? The cost-to-revenue ratio is significantly lower when a non-physician practitioner (NPP) treats Medicare patients. In fact, hiring an NPP may be an easy way to continue seeing Medicare patients while simultaneously freeing up the physician to see patients whose insurance pays more per relative value unit (RVU).
4. Can you be more strategic when scheduling Medicare patients? For example, could you set aside a certain number of daily slots for patients with Medicare to create a more balanced schedule and cashflow equilibrium?
5. Can you focus more deliberately on Medicare denial prevention? The good news about Medicare is that its edits and coverage determinations are completely transparent. This means you can work with your revenue cycle management or practice management vendor to load this information on the front end and prevent denials proactively.
6. Do you know your per-RVU costs? If these costs are less than what Medicare pays per RVU, then you’re technically profiting each time you see a Medicare patient—even when it’s a nominal amount.
7. Can you contract with additional private payers? Sometimes contracting with more profitable payers can offset lower Medicare payments. It’s about striking a balance so you can ensure access while simultaneously remaining profitable.
8. Have you renegotiated existing commercial payer contracts? So many medical practices make the mistake of accepting existing payments year after year. In reality, you have every right to ask for more money. Here are some strategies to make that happen:
Collect cost and quality data. Then, build a case for why your high-quality, low-cost care deserves higher payment rates.
Differentiate yourself. Let payers know what value you provide compared to your local peers.
Consider an escalator clause. This is a contract provision that guarantees a specific payment increased during a defined period.
Negotiate carve-outs for high utilization services. For example, you might be able to negotiate higher rates for office visits to maximize revenue.
9. Are you providing all billable services? This includes preventive services, care management, and many other services that providers typically underbill.
Looking ahead
A trusted revenue cycle management and healthcare vendor can help you make some of these critical decisions that will affect the longevity of your medical practice. Learn how edgeMED can help and be sure to visit the Healthy Snacks Blog for more expert insights, best practices and industry trends.
