allowed any increases to cover infation. Solo practice physicians have to give their staff members and offce people raises every year and the cost of supplies and rent inevitably increases. If they don’t receive payment increases to cover this, they have to see more and more patients to make up the difference. They have to work harder just to maintain.

Most facility-based providers like hospitals, surgery centers, and imaging centers have experienced reimbursement fuctuations from year to year. They generally receive infationary increases, but also receive reductions, as payment systems are periodically updated to become more equitable to the various types of providers. Medicare is a “budget-neutral” program. This means that when money is reduced in one area, it has to be spent in another area within Medicare. Here are examples for four different types of healthcare providers:

Hospital reimbursement is updated often to better reward hospitals that provide higher quality service and disincentivize hospitals that do not measure up. The overall effect is neutral. Medicare just moves money around to encourage better care.
Ambulatory surgery centers have recently received payment cuts to the most common types of procedures like colonoscopies and cataract surgeries, while less common orthopedic and urology procedures are paid at higher rates. This encourages the most common procedures to be done at specialty centers in a sort of effcient “factory style.”
Imaging centers also received a big cut in reimbursement for MRIs and CAT scans several years ago when a law called the Defcient Reduction Act (DRA) went into effect. This made it very diffcult to compete and many providers went out of business or were bought by bigger companies.
Home healthcare Medicare reimbursement was totally changed back in the year 2000. The new system rewarded effcient home health agencies and penalized ineffcient home health agencies. The number of providers reduced from 10,000 to 7,000 within a few years.
68 // The Medical Bill Survival Guide