Insights From Our Editors

Medicare Reimbursement: How to Prepare for a Likely Decrease

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

August 3, 2022

Medicare reimbursements are likely to decrease before the end of the year. Here are steps to take in your practice to prepare for that expected decrease amid persistent inflation.

Cash-flow problems are the common link between most small- and medium-sized businesses. About 90 percent of small businesses are constantly leaking money on useless, and many times unnoticed, things. Over time this can add up to significant amounts of money. At other times, money loss is forecast.

An example is the Medicare physician reimbursement reduction that we face every year. We started the year looking at an approximate 10 percent reduction in Medicare physician reimbursement.

Every year Medicare providers face physician reimbursement reduction “scares.” And every year we rally our professional lobbyists to fight the cuts. This year has been no different. All of this could be resolved by our legislators passing a bill to fix the underlying problem, and every year all they do is pass stopgap measures that just push the problem to next year.

We predict this year will be just like all previous years. No permanent fix will occur.

In the meantime, reimbursement declines negatively impact the practice. This year in particular, with 10 percent inflation hitting on one side of the ledger, and reimbursement rate declines on the other side, we need to make sure that we include that information in our practice’s strategic financial planning.

Here’s a three-step plan to start this process:

  • PLUG THE HOLES: Go through your practice profit-and-loss (P&L) expenses line by line looking for expenses that can be cut. Question everything. Is there a less expensive way to work while still maintaining quality? Two places to start are the frame boards and staff overtime.
  • SPEED UP ACCOUNTS RECEIVABLE: Set up automatic deposit services with every group that is paying you. All of your third-party companies should have an automatic deposit services with your practice. Money in hand today is more valuable than money in hand 10 days from now. There is a time value to money.
  • NEGOTIATE ACCOUNTS PAYABLE: Don’t miss out on taking advantage of discounts vendors offer you for paying by a specific date. If you get a 10 percent discount for paying by the 10th of the month, make sure you pay by the 10th of the month. If you get free shipping when you do a certain dollar amount of business with the company, then reevaluate your buying patterns to make sure you get free shipping. Don’t forget things like banking fees.

Positive cash flow is the lifeblood of every eyecare practice. Negative cash flow does nothing but bring stress and problems. By actively managing this area of the practice you can reduce stress and increase the smoothness of the practice flow.

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