About ten years ago, at a local chapter meeting of the American Academy of Orthotists and Prosthetists, I saw a graph that outlined the Consumer Price Index (CPI) as compared to the Medicare yearly price adjustments the O&P profession receives. The speaker named it “The Jaws of Death.” In the graph, which begins in 1989, the two lines nearly meet at the lower left at about 5 percent, but it then outlines an alligator’s open mouth as the CPI rises faster than the price adjustments (84 percent and 45 percent in 2021, respectively). It formed a picture of the future of O&P care for me. The inflation America and other developed countries are currently experiencing indicates that we will reach a breaking point very soon.
These numbers only represent O&P; other durable medical equipment providers are facing even more drastic differences between the CPI and reimbursement. It also does not include the recent competitive bidding price reductions. Expanding the lens further, we see similar rate gaps for physicians and hospitals. It is part of the reason that the average doctor’s appointment is only 17 minutes, and a follow-up can be two minutes. With reduced reimbursement comes the need to provide in quantity over quality, which may not be a good thing when it comes to medicine.
Why is Medicare so far behind the CPI index? According to the Kaiser Family Foundation, Medicare payroll taxes—the 7.5 percent you pay out of every paycheck and the 7.5 percent matching tax from your employer—only covered 36 percent of the Medicare expenses for 2018. Medicare, as it stands, is insolvent.
With this massive deficit, Medicare and Congress are looking to make the expenditures match the revenue. Congress has passed laws since 1989 that further reduced the reimbursement rate increases to this end. The Affordable Care Act called for cuts to Medicare price increases called the “productivity adjustment factor.” This decreases the would-be adjustment down further every year. A year later, in the Budget Control Act of 2011, Congress increased the debt limit and at the same time targeted various programs for cost cutting. All Medicare providers received a 2 percent cut in spending between April 1, 2013, and May 1, 2020. This reduction is temporarily paused until the end of 2021. While a cost savings for Medicare is apparent from these two laws, the impact on healthcare in the United States is also evident. My estimate is that in five years we will no longer be able to provide normal levels of care to Medicare beneficiaries.
Sustainability requires one of two things to happen. First, if Congress would mandate an increase in the fee schedule to bring us back up or at least keep up with inflation we could stay afloat. Everyone with a stake in the O&P profession should be contacting our representatives and making them aware of the impending crisis. The second option is for us to quickly slash costs by changing how we practice. The prime target needs to be O&P’s number one expense line-item: wages. I know the reality of this is not cheery, but sometimes it is nice to see the alligator before the jaws of death close forever.
Nathanael Feehan, LPO, is the CEO and a practitioner at Master’s Orthotics & Prosthetics, Silverdale, Washington. He can be contacted at [email protected] to see the referenced graph.