Outlook for Ophthalmologists Cloudy After Medicare Changes

uly 27, 2012 — When the Centers for Medicare and Medicaid Services (CMS) announced on July 6 that it intended to substantially slash reimbursements for a broad range of specialists to underwrite the expense of raising payments for primary care physicians by up to 7%, ophthalmologists were among the specialists who emerged largely unscathed.

Ophthalmologists generate a significant amount of revenue through the same evaluation and management codes that primary care physicians use. By directing more money into those codes to boost pay for primary care physicians during the last 15 years, the CMS also has increased Medicare reimbursements to ophthalmologists. In this new proposed rule, CMS increased reimbursements to ophthalmologists by 1%, says William Rich III, MD, who practices at Northern Virginia Ophthalmology Associates in Falls Church, Virginia, and is medical director of health policy at the American Academy of Ophthalmology. The eye specialists had been slated for a 2% increase in total payments, but that was rolled back to 1% to help CMS fund the new discharge management code, Dr. Rich said.

That somewhat neutral budget outlook for ophthalmologists, however, turns bleak very quickly as Medicare moves away from a fee-for-service payment model to value-based care. There, too, Medicare is focused on primary care in the opportunities to bundle services to improve patient care and lower healthcare costs, but despite ophthalmologists' willingness to bundle care for such high-cost chronic eye ailments as macular degeneration, there is no opportunity to do so, Dr. Rich says. "Without any options, ophthalmologists are looking at potential cuts I, frankly, don't think are fair," he said in an interview with Medscape Medical News.

Funding Crisis in 2017

Other proposals wending their way through Congress or put forward by the Medicare Payment Advisory Commission would reduce Medicare payments to ophthalmologists by from 14% to 16%. Layered on top of that would be possible dramatic payment shifts from 2015 to 2017 because of nonparticipation in electronic health records.

"There really is a funding crisis around 2017," Dr. Rich said.

Rumors of more modest reductions in Medicare reimbursements are already having a chilling effect, said Charles Slonim, MD, president of the Florida Society of Ophthalmology, in an interview with Medscape Medical News.

When Dr. Slonim began his practice in 1982, Medicare reimbursed $1919 for cataract surgeries. Private insurers were more generous, reimbursing up to $2600. Although expensive lasers and ultrasound have replaced blades and knives in ophthalmologists' offices, Medicare now reimburses $791 for the procedure in the state of Florida, and private insurers pay from 80% to 90% of the Medicare rate.

At this point in their career, ophthalmologists such as Dr. Slonim would consider adding a partner, winding down their practice, and transferring skills to the next generation, but just as an uncertain economy chills other investment, unsteady Medicare reimbursements disrupt that calculus.

"As an older doc, you never know if you can take on a new partner," Dr. Slonim said.

The uncertainty filters down to students he teaches at the University of Florida and the University of South Florida.

"I see it in the residents and their fears," he said. "Because of the uncertainty of reimbursement, you just don't know what avenue to go down when it comes to becoming a specialist. Everything points to a constant reduction in income and not an increase in income to make up for the hard work."

On paper, such trims appear manageable. In reality, however, ophthalmologists have fixed overhead, with 65% of revenue consumed by personnel, software, and expensive hardware, including lasers, high-magnification slit lamps, and tools used to examine eyes from the outside in. A 14% to 16% reduction in Medicare reimbursements would translate to a 33% reduction in profits.

"It's huge. We do not have elastic overhead. We can't offshore things. The biggest asset we have to increase productivity is personnel," Dr. Rich said.

The significant funding challenges are projected to coincide with what's called the silver tsunami, a projected doubling of the number of Americans aged 65 years and older between 2010 and 2050. The extraordinary medical needs of aging Baby Boomers are projected to include failing vision.

Prevalence of cataracts is projected to increase by 50% from 2004 to 2020. Glaucoma affected 2.71 million Americans in 2011. That prevalence rate is expected to soar to 7.32 million in 2020. In addition, rates of macular degeneration may rise from 1.75 million cases in 2011 to 2.95 million cases in 2020, Dr. Rich said.

Ophthalmologists could meet the increased demands by working with teams of technicians and by using remote imaging to screen for pathology that needs treatment. The coping strategy, however, is thwarted by current CMS guidelines for office-based evaluation and management codes that require the physician to conduct all elements of an exam.

The CMS proposed rule will appear in the July 30 Federal Register. Comments will be accepted until September 4.