Doctors fleeing Medicare, Medicaid

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On a recent visit to the Edmonds Family Medicine Clinic, Curtis Wiggins was shocked to find a flier announcing the clinic will no longer take new Medicare patients.

It made him so angry he started calling and writing his elected officials.

What's going to happen to retired and disabled people? demanded Wiggins, who is 63 and soon will be eligible for Medicare. "Why don't we put 'em in an incinerator and burn them up, if nobody's going to take care of them?"

The 26-doctor Edmonds facility is among clinics and practices around the state closing their doors to new patients insured by Medicare, a federal health-insurance program for retirees and disabled people.

Many clinics also are refusing to take new patients receiving Medicaid, a state-federal insurance plan for low-income residents.

Doctors and clinic managers say they're losing money on reimbursements from these public programs as their costs rise. They are no longer able to shift costs to private insurers, they say, and must limit Medicare and Medicaid patients in order to stay solvent.

Federal and state officials counter that Washington's doctors aren't any worse off than those in other states when the complex formulas governing these rates are decoded.

There is no definitive truth yet, and no statewide statistics on clinic closures. But local medical officials, pointing to an effective cut this year of more than 5 percent in Medicare reimbursements, say the anecdotal evidence points to a growing crisis, particularly outside the Seattle area.

Clinics respond

Here is a sampling of what some clinics around the Puget Sound area are doing in response to what they say are inadequate Medicare and Medicaid reimbursements:

The Polyclinic: 85 doctors, about 25 of them in primary care. Most primary-care doctors are not accepting new Medicare patients, unless they're on Secure Horizons, a Medicare managed-care plan. All specialists and a few new primary-care doctors are taking new Medicare patients. All doctors, with the exception of the Polyclinic pediatrics group, are taking new Medicaid patients.

Minor & James: 70 doctors, 22 of them primary care. Limiting, but not barring, new Medicaid patients. More cuts in Medicare reimbursement, said Lowell Doyle, administrator, will likely precipitate a discussion about barring or limiting new Medicare patients.

Virginia Mason Medical Center: 400 doctors. Takes new Medicare patients, except at its Port Angeles Clinic. Not taking new Medicaid patients in primary-care practices.

PacMed Clinics: 120 providers, including primary- and specialty-care doctors, nurse practitioners and physician assistants. Accepts new Medicare patients in primary-care practices but limits new Medicaid patients.

Group Health Cooperative: About 1,200 doctors, mostly primary care and pediatric, around Puget Sound. Open to new Medicare patients in King and Pierce counties; limits in Skagit, Whatcom and Kitsap counties. No new Medicare patients in Snohomish County. New Medicaid patients accepted in King, Kitsap, Pierce, Snohomish and Spokane counties.

Thurston County doctors

In Thurston County, not a single doctor will take new pediatric patients insured by Medicaid, says Dr. Doug Green, president of the Thurston-Mason County Medical Society.

A large Olympia clinic went bankrupt last year, and patients flooded the remaining doctors. As a result, many aren't taking any new patients, even those paying with cash, Green said. "It's quite frightening."

In Spokane, the largest clinics have all decided to stop taking new Medicare and Medicaid patients, said Jan Monaco, CEO of the Spokane County Medical Society.

Last week, Madrona Medical Group, the largest medical group in Whatcom County, with 50 primary- and specialty-care doctors, decided to bar new Medicare and Medicaid patients.

Many doctors say they think political pressure from angry Medicare and Medicaid patients is their only hope of persuading elected officials to change public insurance rates.

"Part of the reason doctors are closing (their doors) to Medicare is they can't think of a single solution," said Dr. Paul Buehrens, one of 22 physicians at Lakeshore Clinic in Kirkland, which stopped taking new Medicare patients last spring. "But part of the solution will be that Medicare patients will find themselves with nowhere to go and they'll start screaming."

Many practices began taking a hard look at their finances after the demise last spring of Memorial Clinic in Olympia, a 51-year-old multispecialty practice that at one time included about 90 doctors.

Then, last fall, Everett Family Practice Center, a 24-year-old practice once composed of 14 doctors, shut down. This year, a 19-year-old women's health-care practice in Everett dissolved.

"Let's face it, doctors are lousy businessmen," Buehrens said. "Any good business should have had the financial depth to analyze what they were doing, and see this coming. But medical groups run on a shoestring and they always have."

Lakeshore managers last year took a hard look at reimbursements vs. the cost of services, and what they found stunned them: Every patient visit reimbursed by Medicaid lost the clinic $25; every visit reimbursed by Medicare, $10.

"It was truly charity care. You could pay patients to go away and save money," Buehrens said.

Edmonds Family Medicine Clinic struggled with the same issue and came up with similar figures, said CEO Marcy Shimada.

On Jan. 1, after calculating the clinic was losing $10 per Medicare patient visit, the Edmonds clinic closed to new Medicare patients. It hadn't taken on new Medicaid patients for several years.

Both Edmonds and Lakeshore say they'll continue to see current patients.

Medicare and Medicaid facts


• Federal health-insurance program for people age 65 and older and those with severe disabilities.

• About 40 million people insured nationally, and 725,000 in Washington state, according to estimates by the Centers for Medicare & Medicaid Services.

• Reimbursement: Formula is set in federal law, requiring congressional action. The formula looks at a number of factors, including the time it takes a doctor for the given visit or procedure, overhead costs such as office rent and labor, malpractice-insurance expenses and cost adjustments by locale.


• A state-federal health-insurance program for low-income and disabled residents, including children.

• About 920,000 enrolled statewide as of January; about 434,000 of those are enrolled in a managed-care plan called Healthy Options.

• Medicaid is now about 17 percent of Washington state spending, and projected to increase by 11.6 percent a year between 2000 and 2003, according to a 2002 report by the Urban Institute.

• Reimbursement rates are set by the state Legislature and the Department of Social and Health Services.

But the decision has been hard on patients who are trying to find a doctor now.

"When people come to us, they've called two or three other offices. They're finding it harder and harder to find some place to go," Shimada said.

Some patients have begun lying to clinics, saying they're private pay when they're actually insured by Medicare, said Carol Stevens, CEO of Lakeshore Clinic.

The patients pay cash but then ask Medicare for reimbursement. But Lakeshore's doctors, because they are continuing to see existing Medicare patients, are barred by law from accepting cash from any Medicare patient, said Pam Negri, spokeswoman for the federal Centers for Medicare & Medicaid Services (CMS).

When Lakeshore found out about the deception, the clinic refused to see the patients in the future, Stevens said.

So what are patients covered by Medicare or Medicaid supposed to do if they move to an area where they can't find a doctor?

"Go somewhere else for care or move," Negri said.

There is not, and never has been, any requirement that doctors treat patients insured by Medicare or Medicaid, she noted.

Green, in Thurston County, said some patients are being seen at federally funded community clinics, but appointments are hard to get. Others are going out of the county for care, or getting care in increasingly crowded emergency rooms, which cannot turn them away.

"By the time they reach that point, they're more acutely ill," he said.

100-doctor Spokane clinic

The decision to shut off new patients was troubling for doctors, said Dr. Kevin Sweeny, board president of Rockwood Clinic, a 100-physician multispecialty clinic in Spokane.

Rockwood Clinic leaders decided three years ago to close its primary-care practices to new Medicare or Medicaid patients, except for children.

But people such as Wiggins, who is disabled and will be eligible for Medicare coverage when he is 64, doesn't buy the clinics' arguments.

"I think they're greedy. It's just not right," he said.

Wiggins calculated that Medicare pays about $46 for an office visit (2002 figures show reimbursement levels from $48.91 to $52.69, depending on location).

The visits last 10, maybe 15 minutes, so doctors see four to maybe six patients per hour, he said.

"How can you lose money on that?" Wiggins asked.

Bob Perna, director of health-care economics for the Washington State Medical Association, says the costs of running a clinic and providing good health care go far beyond the single doctor a patient may see.

At Rockwood Clinic, for example, it takes 630 employees to support the 100 doctors and 20 midlevel providers, Sweeny said.

As a doctor, Sweeny says, he has an ethical responsibility to help those who need care. But as a corporate leader, he also has a responsibility to stay solvent.

Sweeny doesn't disagree that docs make good money.

"Doctors make more money than 90 percent of the people on this planet," he said. "No one is ever going to convince me that we're not well-paid."

This year's cut in Medicare reimbursement to physicians will amount to loss of about $650,000 in net revenue to Rockwood Clinic in 2002, Sweeny said.

What if every doctor took a $20,000 pay cut, say? That would raise about $2 million — more than enough to cover, at least for a few years.

But then what? Sweeny asks. It's a privilege and an honor to care for patients, he says, but doctors already have effectively taken a pay cut to do that. They're working harder than ever just to maintain their incomes, and making less than doctors in other states, he says, which has led to a "doctor drain" in the state.

The clinic, on its Web site, has urged patients to contact Congress.

"Tell them we're struggling," Sweeny said. "We're not greedy; we're just trying to stay open."

Pressure on insurers

Doctors have long griped about Medicare and Medicaid reimbursements.

But what's changed is that they're no longer able to "cost-shift" onto private insurance programs.

When he started practicing medicine 20 years ago, said Buehrens, a doctor could see out-of-work patients for free. At the end of the year, the practice would add up the numbers, raise prices if it needed — and commercial insurers would cover the difference.

Now, employers are putting pressure on commercial insurers to keep prices down, and they're no longer willing to "subsidize Medicare," Buehrens said.

At the same time, the cost of paperwork, administration, staffing and computers has risen, Perna said.

Dr. David Lynch, a medical director for the Family Care Network in Bellingham, which decided a year ago to take no new Medicare patients, says the costs of providing care for publicly insured patients are much higher than for other patients.

Government bureaucracies require too much administrative work and don't support innovation leading to more efficient care, he said.

And Dr. Scott Baumgartner, board president of Physicians Clinic of Spokane, pointed out another peril of Medicare and Medicaid patient loads. With other clinics around the country under investigation for Medicare fraud, his doctors were spending more time "overdocumenting everything," he said.

Last fall the clinic decided to stop taking new Medicare and Medicaid patients, Baumgartner said.

Need congressional action

The recent clinic closures in Washington state are a "really serious problem," said Negri of CMS.

While CMS is not seeing a national trend, there are "hot spots," and Washington is one of them, Negri said.

It would take congressional action to change payment levels, and proposals to do that have been introduced. Proposals to bump doctors' reimbursements from Medicaid also are being considered at the state level, says Doug Porter, assistant secretary for medical assistance administration in the state's Department of Social and Health Services.

Meanwhile, Negri's office is now trying to simplify and reduce some of the administrative burdens on doctors, she said.

"That would be intriguing. We'd be interested — we'd listen," said Shimada, the Edmonds clinic chief executive.

But most doctors say that without some changes in reimbursements, doctors will continue to leave the profession, leave the state, and leave publicly insured patients waiting on the doorstep.

"If patients don't go to Congress, nothing will ever happen," Baumgartner said. "They aren't going to listen to us — 'boohoo, poor doctors, who make all that money.' "

Carol M. Ostrom: 206-464-2249 or