Cardiology Group Fights Medicare Pay Cuts by Offering Concierge Services

Cheryl Clark, March 19, 2010

For President Richard Wright, MD, and eight other cardiologists with the Pacific Heart Institute in Santa Monica, CA,  a Medicare cut on Jan. 1 was one too many.

That's why the group will start charging patients between $500 and $7,500 for special "extended" access services and same-day appointments. Some patients had been receiving these services for free.

"Concierge practices exist in most other urban areas," Wright explains. "However, to the best of our knowledge, we're the first specialty group to do this, and we know there's a lot of interest from our peers and other specialties to see how it goes. They're saying, 'Let's see if this works,' and if it does, they'll emulate it."

Letters went out to patients Feb. 25 announcing the change, effective April 1. The letters stressed that the charges are for special "ancillary" services, not for care Medicare routinely covers.

"There's been a progressive decline in payments that started 10 years ago," Wright says.

On Jan. 1, the Centers for Medicare and Medicaid Services "reapportioned Part B that was allocated to physician services, reallocating hundreds of millions of dollars from cardiologists to dermatologists, anesthesiologists, ophthalmologists, and primary care doctors." Additionally, CMS eliminated cardiology consult codes, re-categorizing them as patient visits, which are reimbursed at a lower rate, said Pacific Heart Institute.

Some private insurance companies followed suit.

"The consequence was a 26% cut in gross revenues for the same services compared with 2009," says Wright.

For every $100 in revenue they used to bring in, the facility now only receives $74.

Wright emphasizes that these Medicare and private insurer cuts have nothing to do with Medicare's feared 21.5% sustainable growth rate cut that has been postponed until October 1.

"We deliberated this for six months, knowing this would happen," Wright says. "We could not take Medicare any longer, or we could join UCLA or another big system, or we could leave and not practice here."

Part of the problem is their location, he acknowledges. Patients in relatively wealthy Santa Monica, he says, "are remarkably demanding. They call us 50 times a year, and that's not compensated. Frankly, we can't afford to continue to offer that."

The geographic pay distribution is also part of the problem, he says. "In Oakland, cardiologists get paid four times what we get in Santa Monica, but in Santa Monica, rents are four times what they are in Oakland. And we can't raise our Medicare fees."

Even a dental practice in Santa Monica receives three times more for a simple cleaning than a cardiologist gets for an office visit, he says. "That's non-tenable and you can see the root of the problem."

In the letter to patients, the institute wrote, "Medicare and most insurance plans slashed cardiology payments on an unprecedented scale."

"In 2009, Medicare paid $110.74 for a mid-level new patient evaluation, for which we typically schedule one hour; the current payment is $87.07. In March, it is scheduled to be cut to $68.78.

"These amounts are incompatible with maintaining a viable practice unless ancillary services and the time allotted for office visits are substantially reduced. We feel such reductions would not meet your expectation of comprehensive personalized care."

Starting April 1, patients at Pacific Heart Institute can choose one of four plans for care. In the first option, they pay no "participation fee." In the next, called "Select," they pay $500 a year for priority appointments, warfarin adjustments, defibrillator and pacemaker follow-up, notification of non-urgent lab, and test results, according to Pacific Heart Institute.

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