Podcast Recap: Medicare Fee Schedule Cuts / Medical Denial Recourse in Pennsylvania
Episode 74 of the FLATLINING Podcast
In this episode, Matthew and Ron give us an update on the current state of the 2024 Medicare Fee Schedule and any possible adjustments that may come for this year’s rate. Then they look at what Pennsylvania is doing for patients to have some recourse on denials of medical procedures by insurance companies.
The Medicare fee schedule is set every year with programmed reductions in place that take effect if the U.S. Congress fails to act. Ron explained there are some differences with specialties, but overall, the effective rate of the cut for 2024 is 3.37% of the conversion factor. Matthew pointed out that this cut affects both the reimbursement from the Medicare patient, and if a provider has payer contracts that are tied to the current year rates of Medicare, then this reduction will affect those reimbursement rates as well.
Ron provided some hope that Congress may act on this and roll back some or all of this year’s cut. He said there is some legislative activity looking at reducing the cut to 1.5% or possibly all of it. If this was to happen, there’s a chance it would also be retroactive. Something Ron said Congress has done in the past. However, there is the chance that Congress won’t do anything, and that means that the new fee schedule will remain for the year.
Matthew asked Ron if providers should be holding back claims to avoid having to reprocess them if the fee schedule is readjusted, essentially doing the same work twice for just a few dollars more on each claim. Ron provided some sage advice he has used with clients in the past. Namely, if a provider has enough cash on hand to handle expenses and can wait a couple of weeks, then go ahead and wait. According to Ron, if Congress is going to make any adjustments, it is generally by the end of January. If you are not solvent right now, then go ahead and process the claims he said.
To bring us full circle, Mathew asked the obvious question for almost any government program. Why does the Medicare fee schedule get cut every year? Ron explained that in his opinion it’s a combination of two things, first if it is not cut, the Medicare Fee Schedule has a dramatic impact on the U.S. government's 10-year budget deficit projection. Elected officials don’t like to be on the side that can be accused of spending X trillion dollars over ten years. Ron said, “It’s a little bit of a counting game here, if I cut a little bit or let a small cut happen that makes me look better over the next 10 years and it ignores the long-term concerns about what happens when doctors should stop seeing Medicare [patients].”
Ron drives home the point by comparing Medicare fees with Social Security, he pointed out that Social Security does go up every year to maintain pace with inflation. The reason for this is straightforward, he said that those who receive Social Security are a very large and vocal population of voters. Doctors by comparison are not that large of a group, according to Ron about one million nationally, or that organized. The other part of this formula Ron said, is that doctors continue to see Medicare patients. In short, Ron said, “It’s because they can and because they don’t have to worry about upsetting a huge block of voters like they would if they cut Social Security.”
Matthew shifts topics to medical denials, something Ron has spoken about on several national and local media appearances. The FLATLINING Podcast also featured Dr. Dan Hurley, an Arizona ENT physician who bravely battled cancer and his insurance company over the denials of his treatment protocols. Dr. Hurley passed away last summer. With the media attention, a class action lawsuit, and now some federal legislative interest, the state of Pennsylvania appears to be taking some action. Matthew explains what Pennsylvania is doing and kicks off the second part of the discussion.
Ron shared his take on what the class action lawsuits could do if the penalties were severe enough. He points out that if the cost of paying the occasional lawsuit does not impact the profitability of the current claims’ denial process, it is not going to change the behavior on the part of the insurance companies he said. If the penalties are severe enough, there is a good chance this will change insurance company processes. Ron said the size and scope of the litigation would need to be something on the scale of what hit the tobacco industry.
As far as legislative actions, Ron said it is similar. If enough media coverage is shown on this issue and congressional legislators start feeling uncomfortable with this process, then we may see some action. Though, Ron said, he has not seen any new active proposals, but discussions are happening in Congress.
What would get the payers’ attention, Ron said, was something like what happened to Cigna. The Centers for Medicare and Medicaid Services (CMS) punished Cigna for the mishandling of their Medicare Advantage program. Cigna was fined and was not allowed to sell Medicare Advantage products for a couple of years. That kind of financial pain inflicted on profits, and by extension the leadership of insurance companies, would fix this behavior quickly he said.
As far as enforcement, Matthew asked how could this process be policed. Ron said he is generally more of a limited government guy but thinks this could be like the Occupational and Safety Health Administration (OSHA). Ron points out that currently, no entity has oversight of health insurance companies to make sure what is being done is best for the patient.
Pennsylvania has established a system that will allow patients to submit claims they think were wrongfully denied by their insurance companies. There are some caveats that Matthew and Ron explain, namely the policy must be a fully insured type policy, is under the purview of the state Dept. of Insurance, and all appeals with the insurance company must have been exhausted. Ron described the appeals process and how it is deliberately structured to be difficult. This, he said, is to deter patients from filing appeals with their insurance company in the first place.
He pointed out that the impact of a program like this on the micro level is a great step forward, especially if you are the patient. But the impact on the macro level might be less. According to Ron, the reasons are in the numbers. Most large employers are “self-funded” programs, not true insurance, and the state’s Department of Insurance has no jurisdiction over these programs. Ron said only about 20% of policy card holders fall into the fully insured persons category and the difficulty and labor involved in the appeal process is likely to deter many individuals from pursuing a ruling from Pennsylvania’s program. All that said, both Ron and Matt agree that it is a positive initiative launched by the Commonwealth of Pennsylvania and they will be on the lookout to see if other states follow.
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