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Published in Health Care

Michigan physicians group wants state to provide financial aid to cope with rising costs

BY Wednesday, January 11, 2023 08:19pm

The financial pressures that have many U.S. hospitals and health systems operating at a loss also are battering the finances for physician practices nationwide.

That’s why the Michigan State Medical Society plans to push for some kind of assistance from the state in 2023 as the governor and legislators eventually get back to allocating billions in budget surpluses and federal pandemic-relief funds.

Thomas GeorgeDr. Tom George, interim CEO of the Michigan State Medical Society (COURTESY PHOTO)“Physicians are in the same boat” as hospitals, said Dr. Tom George, a Kalamazoo anesthesiologist and interim CEO of the Michigan State Medical Society, an organization representing more than 15,000 doctors across the state. Physicians are “struggling in their own practices for a number of reasons,” George said.

“All of the expenses for a practice are rising. That is a real problem,” he said. “The math is not working well in physician practices anymore.”

The financial pressures on medical practices from higher costs for labor and supplies are worsened by cuts in Medicare reimbursement rates to doctors. The $1.7 trillion federal spending bill that President Joe Biden signed just prior to the end of 2022 includes a 2-percent cut in Medicare rates for physicians. A subsequent 1.2-percent cut will occur in 2024, George said.

The Medicare cuts “will have consequences on health care access for older Americans. High inflation compounds the threat to practice viability because physicians are the only Medicare providers without annual inflation-based updates,” according to Dr. Jack Resneck Jr., president of American Medical Association.

“We are deeply worried that many practices will be forced to stop taking new Medicare patients — at a time when access to care is already inadequate,” Resneck said in a statement after President Biden signed the spending bill Dec. 29. “Congress must immediately begin the work of long-overdue Medicare physician payment reform that will lead to the program stability that beneficiaries and physicians need.”

Asking for aid

In Michigan, George notes that worker compensation and automotive insurance carriers use Medicare rates as the basis for calculating reimbursement payments to doctors, a state requirement the Medical Society wants to see changed.

George hopes that Gov. Gretchen Whitmer and the new Democratic-led state Legislature will consider providing assistance to medical practices.

The governor and lawmakers last year appropriated $300 million in the state’s 2023 fiscal year budget to assistance for Michigan hospitals to cover pandemic-related expenses and lost revenues. Legislators and Gov. Whitmer directed $225 million of that money toward training, recruiting and retaining health care workers through grants administered by the Michigan Health & Hospital Association, which had argued that staffing shortages, higher costs and operating losses threaten access to care.

As hospitals and health systems appeal for further assistance in 2023 amid high inflation that is driving up operating costs and worsening their losses, physician practices are experiencing the same financial pressures, George said.

The Medical Society believes “we can make the exact same case the hospital association makes. Everything they’re saying applies to us as well,” he said.

“We got passed over in 2022,” he said. “The state needs to consider physician practices as well in the next round of grantmaking. We need help with retention and recruitment.”

He rates the chances of that happening as “fair.”

Data are not readily available as to how private medical practices have fared financially. 

However, hospitals in the U.S. through November recorded a median operating margin of negative 0.2 percent, according to Chicago-based health care management consulting firm Kaufman, Hall and Associates LLC, which cited “significant increases in the cost of labor.” A 7-percent increase in operating expenses through November easily outpaced a 3-percent increase in net operating revenue, Kaufman Hall reported.

‘Foot in both worlds’

George became the interim leader at the Medical Society in mid-November following the retirement of long-time CEO Julie Novak. A former state senator who served from 2003 to 2010 after one term in the House, George expects to serve in the interim position for six months to as long as two years and will continue practicing part time with Kalamazoo Anesthesiology PC. He’s also the co-chair of the department of anesthesiology at the Western Michigan University Homer Stryker M.D. School of Medicine.

After joining the board at the Medical Society two years ago, George agreed to step in as interim CEO upon Novak’s retirement.

“I like the mix of still working in anesthesia and taking care of patients one at a time, and that’s challenging. Everybody is different and it’s a unique challenge and you’re really making a difference, hopefully, for that person that day. Their surgery may be critical,” he said. “I get to do that on a personal basis, but then through the Medical Society, we can affect policy that can affect the health of 10 million people at once. It’s a really interesting dynamic to be able to have a foot in both worlds.”

Securing some form of state relief for medical practices similar to what health systems and hospitals got ranks as the top 2023 priority in Lansing for the Medical Society. 

The Medical Society also would like legislators to revisit a law enacted in late 2020 to curtail surprise billing to add a requirement for health insurers to have an adequate care network in a given market.

Surprise billing occurs when patients receive care from physicians who do not contract with their health insurer and are considered out-of-network providers. The situation can leave patients with large medical bills when they receive care, often unknowingly, from providers who are not part of their health insurer’s established network.

The Medical Society argues that the surprise billing law upset market disadvantaged physicians and favored health insurers. A tougher network adequacy requirement would strengthen the current law to ensure competition and “rebalance this skewed market dynamic between physician and insurance companies,” George said.

Read 2913 times Last modified on Thursday, 12 January 2023 08:27
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