Physician Patient

Direct Pay Medical Practices are Growing in Number – Wall Street Journal

July 28, 2013

More Doctors Steer Clear of Medicare
Some Doctors Opt Out of Program, Frustrated With Payment Rates and Mounting Rules

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Ben Sklar for The Wall Street Journal
Juliette Madrigal-Dersch, shown treating a patient in Marble Falls, Texas, is president of a group that advocates private-pay medicine.

Fewer American doctors are treating patients enrolled in the Medicare health program for seniors, reflecting frustration with its payment rates and pushback against mounting rules, according to health experts.

The number of doctors who opted out of Medicare last year, while a small proportion of the nation’s health professionals, nearly tripled from three years earlier, according to the Centers for Medicare and Medicaid Services, the government agency that administers the program. Other doctors are limiting the number of Medicare patients they treat even if they don’t formally opt out of the system.

Even fewer doctors say they won’t accept new Medicaid patients, and the number who don’t participate in private insurance contracts, while smaller, is growing—just as millions of Americans are poised to gain access to such coverage under the new health law next year. All told, health experts say the number of doctors going “off-grid” isn’t enough to undermine the Affordable Care Act, but they say some Americans may have difficulty finding doctors who will take their new benefits or face long waits for appointments with those who do.

Doctor Goes Off Grid
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Ben Sklar for The Wall Street Journal
Dr. Juliette Madrigal-Dersch’s patients pay her directly.

CMS said 9,539 physicians who had accepted Medicare opted out of the program in 2012, up from 3,700 in 2009. That compares with 685,000 doctors who were enrolled as participating physicians in Medicare last year, according to CMS, which has never released annual opt-out figures before.

Meanwhile, the proportion of family doctors who accepted new Medicare patients last year, 81%, was down from 83% in 2010, according to a survey by the American Academy of Family Physicians of 800 members. The same study found that 4% of family physicians are now in cash-only or concierge practices, where patients pay a monthly or yearly fee for special access to doctors, up from 3% in 2010.

A study in the journal Health Affairs this month found that 33% of primary-care physicians didn’t accept new Medicaid patients in 2010-2011.

The pullback in Medicare acceptance is being felt in certain quarters. Joe Baker, president of the Medicare Rights Center, said his patient-advocacy group has had an increase in calls from seniors who can’t find doctors willing to treat them—mainly from affluent urban and suburban areas where many patients can pay out of pocket if their doctor doesn’t accept Medicare. “In most places, doctors can’t pick and choose because Medicare is the biggest game in town, or the only game in town,” he said.

Some experts attribute the rise in defections to Medicare payment rates that haven’t kept pace with inflation and the threat of more cuts to come. Under a budgetary formula enacted by Congress in 1997, physicians could see Medicare reimbursements slashed by 25% in 2014 unless Congress intervenes to delay the cuts, which it has done several times.

“Medicare has really been pushing its luck with physicians,” said economist Paul Ginsburg, president of the nonpartisan Center for Studying Health System Change. “By allowing the SGR and its temporary fixes to persist, Medicare is risking a backlash by senior citizens who say, ‘Hey, this program isn’t giving me the access to doctors I need.’ .”

Some doctors say Medicare’s reimbursement rates—as low as $58 for a 15-minute office visit—force them to see 30 or more patients a day to make ends meet. “Family physicians have been fed up for a long time and it’s getting worse,” said Jeffrey Cain, president of the American Academy of Family Physicians. By disengaging with Medicare and other third-party payers, he says doctors can practice based on what patients need, not what insurers will pay.

Other doctors are dropping out of Medicare to avoid deeper government involvement in medicine, much of which is occurring in Medicare. For example, Medicare is now paying incentives to doctors who switch to electronic medical records and who send data on quality measures to the federal government. Doctors who are part of the Medicare program who don’t do so will face penalties starting in 2015.

While the leaders of some large doctor groups have endorsed such initiatives, Dr. Ginsburg says, “there are a lot of physicians, particularly older physicians, who say, ‘I don’t want to do this. Let me run out the rest of my career practicing like I’ve always done.’ ”

Some doctors are particularly concerned about patient privacy. Earlier this year, gynecologist Mary Jane Minkin, a professor at the Yale School of Medicine, opted out of Medicare and the Yale Medical Group when she saw that the electronic records system displayed patients’ gynecological records to other providers they consulted. “There’s no reason the dermatologist has to know about my patients’ libido issues,” Dr. Minkin said.

All but 10 of the 70 Medicare patients in her practice have continued to see her, Dr. Minkin said, even though they must pay out of pocket to do so.

Doctors have three options for dealing with Medicare: 1. Those who participate bill Medicare directly and must agree to accept its reimbursement rates for all covered services. 2. So-called nonparticipating doctors still file Medicare reimbursement claims but can charge as much as 10% over Medicare’s rates for some services, and they must bill patients for the difference. 3. Those who opt out can charge patients whatever they want, but they must forgo filing Medicare claims for two years, and their Medicare-eligible patients must pay out of pocket to see them.

That prospect rankles many elderly people—in part because they must continue paying their Medicare premiums or risk losing their Social Security benefits. Republican-sponsored legislation in the House and Senate would let seniors use their Medicare benefits to pay doctors privately, but opponents believe that would undermine the entire system, and the bills aren’t given much chance of passage.

Doctors who don’t take Medicare say they don’t necessarily raise rates significantly. Some say not having to submit claims and file mandated reports allows them to keep their overhead low. They can also adjust their fees to fit patients’ needs.

“We give discounts to teachers and preachers, and anybody who comes in wearing spurs gets $5 off,” said Juliette Madrigal-Dersch, a pediatrician and internist in Marble Falls, Texas. She says she also treats patients who develop cancer free of charge. “I couldn’t do that if I took Medicare. It’s considered an illegal enticement.” Dr. Madrigal-Dersch is president of the Association of American Physicians and Surgeons, a conservative group that advocates private-pay medicine. “It’s gone from being a fringy, rebellious thing to a business model,” she added.

When the Mayo Clinic’s small family practice office in Glendale, Ariz., stopped taking Medicare in 2009, only about 500 of its 3,500 Medicare patients stayed on. Since then, an additional 250 elderly patients have joined the practice, paying between $200 to $575 a visit. Physicians say dropping out isn’t easy, and some medical specialties are more dependent on Medicare than others.

Smiley Thakur, a kidney specialist in Seattle, stopped taking Medicare, Medicaid and commercial insurance in 2008 and had to resume two years later, mainly because he stopped getting referrals from other doctors. “Patients weren’t interested in how good I was—they only wanted someone who took their insurance,” Dr. Thakur said. “It’s hard to compete with free.”

Write to Melinda Beck at

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