Doctors have been opting out of the Medicare system at an alarming rate lately as the system goes through a tumultuous year, leaving some accountants’ clients in a bind when they suddenly cannot get their medical bills paid.

At the New York State Society of CPAs’ health care conference on Tuesday, Katherine Dunphy, director of congressional affairs at National Government Services, a major contractor for Medicare administrative services, described this nightmare scenario. While her company is not supposed to deal directly with Medicare patients, it often finds itself on the receiving end of calls anyway. Still, Dunphy noted that many Medicare patients do not take advantage of the appeals process offered by the program.

Dunphy mostly deals with doctor’s offices, which are having a hard time keeping up with the rapid changes in Medicare. The system is on its fourth physician fee schedule of the year, thanks to all the uncertainty and changes brought by the health care reform bill. Medicare has become a daunting system for many doctors' offices, and often not one that reimburses doctors quickly or highly.

While 97 percent of doctors still accept Medicare, according to the Center for Medicare and Medicaid Services, problems with Medicare reimbursement rates have frustrated many physicians and their accounts receivable staff. New York State has the highest number of doctors of any state in the country opting out of the system, according to Dunphy: “Every day we’re getting calls from doctors who are saying, ‘I can’t keep up.’” She noted that in some hospitals on Manhattan’s East Side, it is difficult to find a doctor in certain practice specialties who accepts Medicare.

The Medical Society of the State of New York recently announced that 1,100 doctors had left the system, including the society’s own president, who is also boycotting private insurance plans.

One of the problems has been with the perennial “doc fix” that Congress needs to pass on an annual basis to keep the Medicare reimbursement rates for doctors from plummeting more than 20 percent. While Congress has proposed making the fix permanent, that seems about as likely as making the alternative minimum tax patch permanent as well. The confusion in Washington over the “doc fix” and changes from the health care reform bill resulted in Medicare claims processing being delayed for an entire month in June, putting doctors in a precarious position waiting for their patients' claims to be paid.

Still, the Medicare system is trying to prod doctors into modernizing their practices, taking a carrot and stick approach in some instances. Yet despite all of President Obama’s talk about the advantages of electronic medical records and other new technologies that the health care reform bill would usher in, Dunphy said she has actually been seeing an increase in the number of paper claims filed through her office. Her office has to use a scanner to process them for Medicare. She is trying to promote the use of electronic claims processing, but when she goes into doctor’s offices, she is sometimes asked to help fix the printer so it lines up the paper forms the right way.

Dunphy has been educating doctors about changes in Medicare service coding and the increasing crackdown on Medicare fraud, as the federal government tries to find ways to curb the cost of health care. New York City has seen an uptick in fraud in some specialties such as physical therapy, where one group in Brooklyn was recently found to have bilked Medicare out of about $72 million.

Doctors and their patients need to find out from their accountants about some important changes in Medicare next year. Starting in 2011, claims have to be submitted within 365 days. That goes for appeals against Medicare determinations as well.

“People hold onto their old medical bills,” said Dunphy. “Now is the time to get those in. Look at those receivables.”

Accountants should also be telling their physician clients about some of the incentives being offered by the federal government to encourage them to modernize. Under the Recovery Act, beginning in 2011, eligible professionals who implement and report meaningful use of electronic health records will be eligible for incentive payments equal to 75 percent of Medicare allowable charges for covered services furnished for a year, up to a maximum payment of $44,000. However, Dunphy cautioned that the electronic medical records system needs to be certified, and physicians also have to be careful that they don’t get ripped off by vendors who don’t know what they’re doing.

Despite the controversy in the past year over the health care reform bill, retirees should be made aware of the potential benefits. That includes the closing of the so-called “donut hole” in Medicare Part D prescription drug coverage, which has resulted in more than a million seniors receiving a $250 rebate check if they managed to reach that coverage gap this year. Seniors will also be able to get a free annual wellness exam starting next year.

Companies too have been applying for subsidies for covering early retirees under the health care bill. Retirees aged 55 to 65 are eligible under the program, and so far 78 companies in New York have applied for the program to help pay the cost of providing health insurance to early retirees.

There is some good news, but also much uncertainty surrounding Medicare. By December 1, a national deficit commission is supposed to report to the White House and Congress on what kinds of changes are needed to get the country’s fiscal affairs in order. As one of the largest and fastest-growing federal programs, especially as more Baby Boomers retire, Medicare is likely to be one major item that’s going to be spotlighted.

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