What are Medicare Reimbursement Rates?

Medicare reimbursement rates are the rates paid to doctors for performing a certain procedure. For example, those who go to the doctor for a regular checkup, and are on Medicare, will be covered by a certain amount under the policy. That is the payment the doctor can expect. While the system is relatively straightforward and simple, there is also some controversy associated with Medicare reimbursement rates. Some doctors feel that the rates fail to meet their expenses.

All doctors have the opportunity to decide whether they want to participate in the Medicare program. Even doctors who do not officially list themselves as Medicare providers may be able to see patients and submit claims for them. If this happens, the Medicare reimbursement rates that doctor receives will be somewhat less than those a participating doctor receives. Therefore, doctors who decide to opt out of the system normally will not see Medicare patients at all.

In the past, the Medicare reimbursement rate was dependent on a complex formula that included the cost of living in the local area. A doctor in a rural state with a lower cost of living and, it is assumed, lower expenditures, would not be paid the same amount as a doctor in a metropolitan area, even if the family practice was similar. That led to many rural doctors protesting the Medicare reimbursement rates, saying that no matter where they lived they still had significant expenses, including student loans, that were on par with their big city counterparts. Further, the U.S. government realized its policy was discouraging doctors from setting up practices in under-served areas. Thus, there is now a more uniform payment distribution of Medicare reimbursement rates.

Other things may affect the rates as well. A hospital's Medicare reimbursement rate will generally be higher than that of a doctor's office. This is because the expenses of a hospital to perform the same procedure are generally greater than for a doctor in private practice with the same capability.

Those health care providers who will accept Medicare patients have no choice, but to accept Medicare reimbursement rates for any procedure they offer. They cannot pick and choose. Further, they cannot charge the patient additional co-pays to make up for what a private insurance carrier might be willing to pay for the same procedure. While these may be considered disadvantages, the benefit for the doctor comes in having access to a greater number of patients. Many of these patients will require increasing numbers of visits to the doctor as they age, thus providing a steady stream of income for the doctor.