The nation's Medicare doctors, already facing higher costs and sluggish revenue, now face a pay cut because of the automatic spending cuts that were triggered Friday.
Under the so-called sequester, Medicare payments to health care providers, health care plans and drug plans will be reduced by 2% starting April 1, according to the Centers for Medicare & Medicaid Services.
The bottom line is that doctors who treat Medicare beneficiaries will only be reimbursed 98 cents on every dollar for a vast array of services. Reimbursement for low-income beneficiaries is exempt.
Overall, the cut will mean $11 billion less for doctors, hospitals and other providers in 2013. Last year, the agency doled out more than $500 billion in such payments.
A 2% cut may not seem large, but Medicare payments to doctors have been lagging, said Dr. Jeremy Larazus, president of the American Medical Association.
"Over the last 12 years, Medicare payments to physicians have increased by only 4%, while the cost of providing care has jumped 20%," said Lazarus.
The cuts could make it harder for patients to get care, Lazarus added. "One in five Medicare patients already is facing difficulties in finding a doctor to take them. If you cut their pay, this access problem will only get worse."
The threat of payment cuts isn't new for doctors who treat the nation's 47 million Medicare patients.
Federal law already triggers annual Medicare cuts to keep the program financial sound. But Congress has stepped in and blocked those cuts -- which now stand at 29% -- from happening more than two dozen times over the past decade.
Dr. David Wilt is an internist at a primary care group practice in Kansas City. About 60% of patients treated at his practice are Medicare beneficiaries.
Wilt agrees with Lazarus that Medicare patients are having a tougher time finding doctors. It's happening at his practice, which has already stopped seeing Medicaid patients because of "abysmal reimbursement rates."
"At some point, we will do what we have to if it means keeping the practice afloat," said Wilt. "This includes reducing the number of patients whose payments are too low for us to run our business."
Dr. Jeffrey Cain, president of the American Academy of Family Physicians, is concerned that the 2% cut will catch on with private insurers, too.
"Most private insurers base their payment rates on Medicare. We anticipate that they will also reduce reimbursement by 2%," he said
If this happens, Cain said doctors with small practices will take a greater hit.
"Small practices, especially in rural areas, are small businesses that run on razor thin margins," he said. "These cuts will force them to make a choice. Do we keep seeing the elderly or do we keep our practice afloat."