Congress nixes part of the Medicare cut
Plus: Bipartisan push to reform Medicare payment models
Good morning and happy Friday. This is the Friday Pulse Check from Fulcrum Strategies.
I have clients around the country that are still feeling the affects of the Change Healthcare cyber attack. UnitedHealth Group’s stock price has only dropped about $30 a share (~5%), so it hasn’t affected markets that much.
Supposedly, UnitedHealth Group says the systems will come back online today according to a report this morning on CNBC’s Squawk Box:
LIVE UnitedHealth Group stock price: UNH 0.00%↑
In the news:
HHS opening investigation into Change Healthcare attack - Healthcare Dive
Opinion: Will the Change Healthcare incident change healthcare? - Health Affairs
Aledade accused of Medicare fraud - MedPage Today
Senators push to include PBM reform in March 22 spending push - Modern Healthcare
EPA limiting usage of medical sterilization gas ethylene oxide - STAT
Trump walks back remarks about “cutting” Medicare - The Hill
Lilly adds Amazon Pharmacy to direct delivery service - Health Exec
LIVE Lilly stock price: LLY 0.00%↑
LIVE Amazon stock price: AMZN 0.00%↑
Physician unionization
Ascension St. John contracted physicians “inching” toward strike - The Detroit News
California Watch
Mental health funding vote, also known as Prop 1, still too close to call - The Los Angeles Times
Due to some conflicting schedules, we didn’t record a new episode of the FLATLINING Podcast from Fulcrum Strategies this week, but we will have a new episode next week and another great interview the week after that.
Subscribe to the FLATLINING Podcast on Apple Podcasts, Spotify, the iHeartRadio app, Amazon Music, Google Podcasts, Stitcher, Pandora, TuneIn, and Audible.
Medicare cut reduced
As part of the eleventh hour spending bill to keep the government open, Congress managed to pass some Medicare fee schedule reform that reduces the 2024 cut from 3.4% to 1.7%. As a result, there will be a 2024-A and 2024-B Medicare fee schedule since the new schedule went into effect on March 9th.
While it is progress, it is still a cut. As our President and CEO said on LinkedIn this week, its like someone is “still going to beat you with a stick, [they’re] just going to do it more slowly now.”
My interest was piqued this week when read that there appears to be some bipartisan support to reform the Medicare reimbursement system, out of fears that physicians will stop seeing Medicare patients. I know of some of our clients have started to limit new Medicare patients simply because straight Medicare reimbursement doesn’t cover the costs of the procedures these seniors need.
There is also the added problem that healthcare premiums and out of pocket expenses continue to rise. In an analysis in Health Affairs this week, several reporters correctly pointed out that commercial insurance is often one hundred and fifty to two hundred percent of the Medicare fee schedule. They incorrectly, in my opinion, made the conclusion that if all physicians are paid at Medicare rates or even 150% of Medicare rates, premiums and out of pocket costs would drop immediately, but anyone looking at UnitedHealth Group’s $32 billion in profit would know they could drop premiums at any time.
I’m not claiming the Medicare fee-for-service model is the end all be all. The payment model desperately needs reform. Clearly making reimbursement transparent hasn’t worked. As we have seen in North Carolina with the state employees’ health plan, trying to force everyone on to the same rate doesn’t work.
Congress must evaluate what works about the Medicare fee schedule and what doesn’t. What works is the idea that there is some stability and standard in pricing. What doesn’t work is cutting it every year as the cost of providing that healthcare rises.
To reference Winston Churchill, the Medicare fee-for-service model might be the worst payment method for healthcare, but perhaps it is better than all the rest.
Have a good weekend,
Matthew