In a prior blog, we discussed the CMS report regarding the projected solvency of the Medicare Program.  As we previously reported, CMS has projected the solvency of Medicare through 2024.  However, a reading of the report shows that to accomplish this goal, payments to physicians as of January 1, 2012 need to be reduced by approximately 30%, and Medicare would need to follow the current statutory requirements of reducing payments to all other providers, resulting at some point with those providers receiving less than Medicaid.  Since the issuance of a CMS report, an analysis has been conducted by the Congressional Budget Office (CBO) which confirms that portion of the CMS Report dealing with the necessity for a reduction in physician compensation.

Since 2012 is a federal election year (for the President, Senate and House members), it is highly likely that a stop gap measure will be enacted and signed into law, kicking the can down the road, to January 1, 2013, after the election.  From the provider point of view, this Damocles sword presented by the threat of reduced future payments from the Medicare program (whether the providers are physicians or non-physician providers) clouds the ability of the providers to commit resources to their current practice.  Providers may be reluctant to bring on additional employees, whether physicians or other employees, to otherwise expand their practices, or to acquire practices.

Even the delay of implementation of a physician payment reduction until January 1, 2013, while it will provide relief during the election year of 2012, is not a solution to the problem.