When Dan and Christine Morissette decided to move her ailing father from Seattle to live with them in Corvallis, their first order of business was to find a local physician to look after him.

The octogenarian is covered by Medicare, the federal health insurance program for the elderly, so the Morissettes thought it would be a simple matter of making a phone call and scheduling an appointment. Instead, it turned into a painful lesson in the harsh realities of health care economics in America.

“We called the Corvallis Clinic because that’s where most of us are seen,” said Dan Morissette. “They basically said, ‘No, we’re not going to take Medicare patients.’”

Next the couple tried Corvallis Family Medicine, where their daughter goes for health care.

“They said yes, but the doctor we wanted to see we weren’t going to be able to see because he already had his quota of Medicare patients.”

Morissette’s father-in-law did get in to see a doctor, but it took nearly a month. The whole experience left the family feeling shaken.

“It seemed kind of crazy to me,” Morissette said.

Maybe so, but turning away Medicare patients is becoming an increasingly common response to the federal program’s low reimbursement rates — and the problem could be about to get a whole lot worse.

The rates Medicare pays for outpatient care are slated to drop nearly 10 percent next year. If that happens, national surveys suggest, as many as 60 percent of physicians would limit the number of Medicare patients they see or stop taking Medicare entirely.

If that seems implausible, consider this: According to the Oregon Medical Association, 23.7 percent of primary care practices in the state are already closed to new Medicare patients, up from 11.8 percent in 2004. Only one in four of the physicians surveyed by the OMA said they would continue to accept new Medicare patients if rates went down as projected next year.

Are you worried yet?

Holding the line on costs

Health care advocates trace the problem to the Balanced Budget Act of 1997. The law contained a provision designed to rein in Medicare spending by implementing a spending target for Part B — the portion of Medicare that covers doctors’ fees — called the “sustainable growth rate.”

Since 2001, the formula has kept physician reimbursement rates roughly the same while the costs of running a medical practice have risen about 5 percent a year, said Dr. William Jessee, the president and CEO of the Medical Group Management Association. Congress has stepped in several times to avert rate reductions, but that has only deferred the problem, leading to proposed cuts of 9.9 percent next year and close to 40 percent over the next nine years.

A survey of the association’s membership released earlier this month indicated 41 percent might limit the number of Medicare patients they see while 19 percent would stop taking new patients covered by the federal plan, mirroring an earlier study by the American Medical Association. In addition, 57 percent said they’d have to scale back employee health benefits, 44 percent said they’d trim their administrative ranks, 33 percent said they’d reduce clinical staffing and 9 percent said they’d cut the number of doctors in their practice.

Doctors also worry that the Medicare cuts could trigger a cascade of more economic bad news, Jessee said. Other federal health plans such as Medicaid and Tricare, which covers military families, are tied to the Medicare rate, and most private sector insurers use it as a barometer.

“It all becomes a matter of what will the market bear,” Jessee said. “When Medicare rates don’t go up, it becomes much easier for private payers to say, ‘We’re not going to raise our rates, either.’”

Meanwhile, more Americans are qualifying for Medicare as the Baby Boom generation ages. At the same time, physician retirements are on the rise and U.S. medical school capacity is lagging far behind the demand for new doctors. That’s creating a physician shortage that’s already being felt in the mid-valley, especially in primary care areas such as family practice and internal medicine.

“The general consensus is we’re getting pretty close to the meltdown stage,” Jessee said. “This has all the makings of a perfect storm.”

Negative reaction

These are the kinds of considerations that drove the Corvallis Clinic to impose limits on new Medicare patients in early 2003.

CEO Andrew Perry points out that the clinic still treats a large number of Medicare patients, including those who were on the rolls when the new policy went into effect. Pediatrics and specialty practices are still open to new Medicare patients. But with few exceptions, primary care practices are not.

“Our cost of delivering care to the Medicare population is higher than the reimbursement we receive,” Perry said. “Primary care has to be the gatekeeper because we can’t limit specialty care — in some cases we’re the only physicians (in the mid-valley) in that specialty.”

Perry stressed that it was not an easy decision for the clinic’s 80 health care providers to reach, and the topic of reopening primary care to new Medicare patients is regularly discussed.

But the economics haven’t changed.

Medicare’s “conversion factor” — the base rate it pays for services such as an office visit — currently stands at $37.90. But The Corvallis Clinic charges anywhere from $80 to $105 to see a doctor, so even with adjustments to the conversion factor allowed by Medicare, the clinic is left with a hefty writeoff every time one of its doctors sees a Medicare patient.

“The alternative would be we could see Medicare patients, accept the reimbursement for what Medicare pays and then balance-bill the difference, which would be significantly more,” Perry said. “Then (the patient) would not have the ability to pay, and then we would have the responsibility of trying to collect — and that would be unfortunate.”

Clinic spokeswoman Judy Corwin noted that Medicare patients who are turned away are referred to the clinic’s Find-A-Physician service, which tracks open and closed practices throughout Linn, Benton and Lincoln counties.

“We try really hard to provide a solution,” Corwin said. “It’s not easy to say, ‘We’re not open here.’”

Corvallis Family Medicine also imposed Medicare restrictions in 2003, but it has taken a slightly different approach. The group focuses on patient mix, trying to limit Medicare to 15 to 20 percent of the total caseload of its six physicians.

“I would have to say most of our doctors are over that,” said practice administrator Shelley Hunt.

Like the Corvallis Clinic, Corvallis Family Medicine doesn’t track its total annual writedown for uncompensated costs. But Hunt estimated that Medicare typically pays between 35 and 50 percent of actual charges — and she predicted that if reimbursement rates don’t go up, more physicians will begin turning away Medicare patients.

“At some point, something’s got to happen,” she said. “We can’t just keep taking new patients and more patients and keep getting paid less and less and less.”

Shifting the burden

As a growing number of practices close their doors to Medicare patients, the workload increases for physicians who do accept the federal health insurance.

In the mid-valley, that includes a handful of independent practitioners and Samaritan Health Services, the nonprofit that operates five hospitals and a large network of primary care and specialty clinics throughout the region.

While Samaritan’s tax-exempt status does not require its 100 or so primary care physicians to accept Medicare, Samaritan does so as a matter of policy, said Dr. Kevin Ewanchyna, the network’s vice president for medical affairs.

About 40 percent of Samaritan’s total patient load is covered by Medicare, Ewanchyna said, which resulted in a writedown of just under $16.5 million in unpaid costs last year.

Because it’s so big, Ewanchyna noted, Samaritan has some economies of scale that help minimize that impact, but it can’t be avoided entirely — as crowded waiting rooms attest.

“Our clinics do feel that impact because the Medicare population is increasing, not decreasing,” he said. “Every patient that walks through the clinic door (who’s covered by Medicare), the clinic takes a loss. Medicare is not a strong payer.”

Feeling the pressure

In part because some practices aren’t taking new Medicare patients, those that still do are seeing intense demand for services — especially in Linn County, where the regional shortage of physicians is particularly acute. Many of Samaritan’s primary care practices are closed to all new patients because of volume, as are many of the few remaining independents in the area. And if a patient can find a doctor willing to accept Medicare, it can take weeks to get an appointment.

Dena Sprague, who runs the Find-A-Physician service for the Corvallis Clinic, said she’s constantly fielding calls from people who’ve hit dead ends in the search for medical care. She can usually help them, but it can be quite a challenge.

“It’s so hard to hear patients because they’re so frustrated with the system,” Sprague said. “You can hear it in their voice because they’ve tried to find a physician and they can’t.”

Dr. David Irvine, one of four independent primary care physicians working in shared office space in Albany, said those practices are completely booked.

“We don’t have the capacity to take any new patients,” Irvine said.

He and his colleagues treat plenty of people covered by Medicare, Irvine said, and while he thinks the world of his patients, he is far from thrilled with their insurance plan. Not only are the reimbursement rates low, he said, but Medicare requires even more paperwork than private plans and frequently rejects claims for services that should be covered.

“These people are wonderful to take care of, but you don’t get paid for what you do,” Irvine said. “I don’t blame (doctors) who won’t take Medicare.”

By Bennett Hall. He can be reached at 758-9529 or bennett.hall@lee.net.