Question

As part of on-going budget negotiations, suppose Congress decides to significantly lower Medicare reimbursement rates to physicians. Discuss the likely consequences of this action to (i) physicians, (ii) Medicare patients, (iii) non-Medicare patients, and (iv) the federal government.

Answer 1

i.

If reimbursement rates are reduced, incomes of physicians are limited. This creates an adverse effect – physicians would be reluctant to take Medicare patients; they may not sign new contract with Medicare.

ii.

Medicare patients would be sufferer, since physicians are reluctant to take them. Although those patients contributed their share of premiums to Medicare, they may not get timely service as and when required.

iii.

Non-Medicare patients would get better service and caring than Medicare patients. Physicians would like to take those non-Medicare patients, since their payments are not restricted by “lower rates”.

iv.

The government would be in trouble, since Medicare patients would certainly protest. Although the payment becomes low by lowering rates, the agitation of public protest would be much higher. Actually, such “lower rates” cannot benefit either.