Practice costs continue to outpace reimbursements

The pressure on medical practices to cope with rising operating costs is not just one of perception, but based on real, staggering numbers.

In fact, the cost of operating a practice, as measured by the Medicare Economic Index (MEI), surged 27 percent from 2002 to 2012, according to a report (.pdf) from the Medicare Payment Advisory Commission (MedPac). Meanwhile, Medicare spending for physician services per beneficiary increased 72.4 percent, according to MedPac, amid a 9 percent increase in Medicare payment rates.

"We've had concern that the Medicare [fee schedule] updates have been relatively flat and have not kept up with the cost of delivering services," Glen Stream, M.D., who chairs the board of directors of the American Academy of Family Physicians, told Medscape Medical News. "Practices are torn in their altruistic professional desire to take care of patients and the economic reality that is more and more difficult."

While healthcare experts suspect that some of the spending increases are a result of physicians raising volume to help offset flat reimbursements, Stream noted that much of the spending may be clinically necessary to care for an aging population suffering from multiple and complex conditions.

"If we can do better at wellness and prevention and care coordination, we can squeeze out services that aren't necessary," he said.

Further, despite hopes that the sustainable growth rate (SGR) formula will finally be repealed, the proposed raises would still trail inflation, Medscape noted.

To learn more:
- read the article from Medscape
here's the MedPac report (.pdf)