The Medicare dilemma: Medicare reduced the amount of money it will reimburse for medical treatment and many doctors are opting out of taking Medicare patients as a result.

• Author: Myers, Deborah J.

Medicare reimbursement has always been challenging for medical care providers to obtain because of complex billing codes and quicksilver regulations. Add to this last year's 5.4 percent cut in compensation to health care providers and a 4.4 percent cut proposed for 2003, and it should be little wonder why some providers are eliminating Medicare as a payor.

"Physicians cannot afford to keep their clinics open with current reimbursement," said Dr. Bruce J. Kiessling, from Health South Primary Care Associates in Anchorage. "They reimburse $.40 on the dollar and it costs $.65 on the dollar just for overhead. It's a pro bono situation where we have to donate time and it's a net loss."

Dr. Harold Johnston, director of the Alaska Family Practice Residency of Providence Alaska Medical Center in Anchorage, estimates that overhead for medical care providers has increased 15 percent in the last two years. Add that to the nearly 10 percent Medicare reimbursement reduction that physicians could see between 2002 and 2003, and the sum is a 35 percent discrepancy between payment and cost.

"Medicare payments to physicians even before the 5.5 percent cut were less than the cost of the service," Johnston said. "The cost of rent, supplies, nursing and support staff amounts to more than what Medicare will pay. Physicians were seeing Medicare patients at a loss or at best, breaking even. Then, they plan to cut the fees again."

Medicare reimbursement is based upon a formula related to gross domestic product.

"It has not kept up with the cost of providing the care nor the increase and increasing demand in the population," Health South's Kiessling said. "Formulas that were adequate in 1965 have been progressively ratcheted down in reimbursement."

Kiessling said that he knows of a physician in Denver who was forced to close his practice because of the gap between expenses and Medicare reimbursement.

"He let go his entire staff," Kiessling said. "He took care of patients by doing house calls and carrying records in his trunk."

One of the solutions is to opt out of Medicare. That means neither the patient nor the physician may bill Medicare for any care given by that physician. Physicians choosing this option may not bill Medicare for two years, and then have the opportunity to continue to opt out or to participate again.

"It punishes the Medicare patient who goes to a physician who opted out," Kiessling said.

Some Medicare patients don't have the resources to cover their medical expenses without compromising their ability to...