Gap Rising Between Medicare Reimbursement Rates and Cost of Providing Care

Physician Practice Costs Increase By 3X Medicare Fee-For-Service Rate Updates 

The gap between Medicare payment updates and the cost of providing healthcare is widening, according to data provided by the Medicare Payment Advisory Commission (MedPAC).  According to the MedPAC data, Medicare fee-for-service rates increased by nine percent from 2002 to 2012 while the cost of operating a medical practice (staff compensation, rent, supplies, etc.) increased by 27 percent over that same time frame.

An article on this issue in Medscape Medical News noted that Medicare per-patient costs for physician services went up significantly more than the nine percent rate increase over the 2002-2012 period.  Regina Herzlinger of the Harvard Business School said this is further evidence that third-party price setting does not work in containing healthcare costs.

The Medscape article can be found here.