Medicare cuts are forcing doctors to charge an annual fee

Here’s a novel way some physician groups are countering Medicare cuts.

Charge everybody an annual fee.

As reported on NPR’s health blog, Shots, a cardiology group in California will resort to annual fees ranging from $500 to $7,500 — which seems like a pretty big range to me. Of course, specialties like cardiology are panicking more than others, since reimbursement cuts for heart studies is scheduled to be approximately 40% or more.

Straight Medicare (not Advantage plans), covers less services than patients think. For instance, telephone calls or e-mail with doctors, along with regular, routine preventive health exams, are not covered.

This forces doctors, who are faced with declining reimbursements, to bring patients into the office for non-urgent matters — like discussing lab results.

Although an annual fee seems extreme, physicians are simply playing by the rules that Medicare dictates. Much of this nonsense can be averted if Medicare would simply placed less emphasis on face to face office visits, and appropriately valued physician-payment communication electronically or over the phone.

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  • Peter

    The annual subscription fee is the only recourse available to physicians to recoup lost income in a system where balance billing is prohibited.

  • Dr Lemmon

    You wrote: “Much of this nonsense can be averted if Medicare would simply placed less emphasis on face to face office visits, and appropriately valued physician-payment communication electronically or over the phone.”

    It is not nonsense. I hope they never cover those things or make yearly surcharges illegal. Medicare would never reimburse enough for the work involved. Doctors have figured out a way to survive and only if patients consider it valuable will they pay the additional fee. As more physicians catch on watch the price fall. In fact, I guarantee it will fall and the service will improve as well.

  • ninguem

    Much like the current Obamacare promises…..”You can stay with your doctor if you want”……..”If you like your health plan, you can keep it”…….the original enabling legislation for Medicare allowed doctors and patients to privately contract.

    It’s my understanding that the language allowing this was not repealed. At least one attempt to test this in court was dismissed. Some language about not “ripe for litigation”.

    Not a lawyer, so not sure of all the technical implications of all this. If I don’t understand correctly, I’d be glad to learn the straight story.

    If this is accurate, I would imagine the cuts constantly threatened and repeatedly postponed will cause this to be tested sooner or later.

  • Matt

    Medicare isn’t forcing anything. Physicians are doing this, by choice, to reach a certain level of income. Nothing wrong with that but let’s call it what it is.

  • primaryMD

    this is exactly what needs to happen. A yearly fee that covers things like email, phone calls, research, etc. Combined with a charge for services rendered face to face.

    It’s the model we all should be working toward. Doesn’t thins make sense?

  • SmartDoc

    If you think healthcare is expensive now, wait until ObamaCare… to paraphrase P.J. O’Rourke.

  • Larry

    Just to clarify a point. The PHYSICIAN pay reduction that just took effect April 1 is not a 21.2% decrease!

    My office overhead, like that of most Internal Medicine offiices, is fixed at about 50%. I cannot pay 21% less rent. I will lose my valued and experienced employees if I cut their salaries 21%. I cannot pay 21% less for my insurances (malpractice, office liability, unemployment). Therefore, I am personally “eating” the entire cut in reimbursement. My take home pay for each Medicare visit has go down 42.4%!

    I do not chose to work for any reduction in fee scale, much less a 42% reduction. Unless the fix is made soon I will simply drop Medicare (or any other plan that cuts reimbursement) and retain those patients who wish to see me privately. I will charge for ALL MEDICAL SERVICES (office visits, hospital visits, phone, e=mail, face to face, prior authorization, whatever….) at an hourly rate, in increments of 5 minutes. I will set my rate to be a bit less than the hourly rate my tax attorney charged 15 years ago!. I will also require a small retainer so that non-face to face services (phone calls, e-mails, authorizations, etc) will not have to be billed to the patient each time. I no longer wish to be in the business of being paid weeks after providing the service.

    I’m giving Congress until May 1 to fix the Medicare pay problem permanently. If Barry doesn’t have a permanent pay fix bill on his desk by then, I’m gone. Meanwhile, I have postponed all non-urgent Medicare visits until May.

    • pp


      I understand and your frustration. I want to just point out that it really should not matter if congress does or does not fix the medicare pay problem. It is time to stop taking care of all the patients you can at what ever rules/rates they say they want you to follow/take.

      The per hour rate for an internist after all the expenses (mal practice, state licensing, dea licensing, salaries, rents, …) is about the same as a mechanic constantly working 40 hours a week every week. Except you work 60-70 hours a week and are subject to a lot more risk.

      This society is a taker society. Most physicians are caring individuals who do what they can for their patients and play by the rules given to them.

      They (the insurance, pharmaceutical and lawyers with the help of their political friends) have mouthed support for primary care for over 20 years. In the meantime, primary care salaries have gone down to that of the level of nurses while all of THEY have helped themselves to inordinate amounts of compensation and benefit increases on your backs.

      Do you really think THEY will do anything other than the minimum to prevent the breaking of the camel’s back?

      Pray that THEY let the cuts come through and the medical payment system gets upended. As you know sometimes cutting the gangreous limb off, though painful, is the only way to save the patient.

  • Evinx

    Sure do hope there is no Medicare “fix” (haha) this month or ever. The system is dysfunctional + causing all kinds of distortions – exactly what economists predict when you have price controls – and that is what Medicare/Medicaid programs fall under.

    The bottom line is all will be “concierge” in one way or another – and that will be good for medicine, for patients, and for all providers.

  • Jadedmd

    You go, Larry!(or Barry!). I hope more docs will follow suit. If I can’t make my overhead by the end of this year, I’m going the hospitalist route myself

  • Dr. Jack Lewin

    There is a widespread consensus among medical providers that significant reforms are needed to the Fee-for-Service payment system in place today. The system rewards doctors for volume of care rather than emphasizing quality as the metric for reimbursement to physicians. This payment system, coupled with potential Medicare reimbursement cuts, has created an environment shifting specialists from unsustainable private practices to hospitals.

    To remedy this changeover among specialties, a payment system must be enacted to resolve the current healthcare environment and place increased focus on evidence-based medicine and quality of care improvements. The new health care law does not address delivery and payment system reforms that provide incentives for improvement of quality and outcomes, nor does it repeal the sustainable growth rate (SGR) formula.

    Eliminating the SGR and Fee-for-Service payment systems are reforms that will improve the quality of care and make payment structures based on annual fees unnecessary. That said, all Fee-for-Service payments will not go away, such as for elective procedures and episodic, one time services. But, 75 percent of care costs relate to chronic disease, where there could be a win-win-win of savings for payers, reduced administrative costs for all, and a significant upside or payment increase for doctors and providers for higher quality and improved outcomes in a reformed payment model. Some integrated systems are already thus engaged to everybody’s benefit.

    To learn more visit the Lewin Report at

  • Larry


    Do you really believe that you can measure the quality of care I provide in a meaningful way? And how are you going to do that? Not by having me spend even more time reporting new codes that don’t measure anything, as does the current Medicare effort. Total waste of time an effort. Which Big Brother appointee is going to look over my shoulder this week?

    Do you really think that as a professional I should not be paid by the hour (or minute) for the service I provide my clients (we medical professionals call them patients)?
    Fine, just make me a government employee with a 40 hour week and full benefits… Oh, and repay me for all the educational loans that I have paid off in the past (and pay off the outstanding loans of recent graduates). Oh, and revise the US Constitution to make my new indentured status legal..

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