MEDICARE FEES: Primary Docs Gain, Specialists Lose
The Health Care Financing Administration announced Friday that physicians' fees under Medicare will increase 2.3% for 1999 and that the transition will begin to a new and "fairer" payment system that narrows the gap between payments for primary care doctors and specialists. Under the new program, payments will be tied to actual resources used instead of historical charges, a move that means office-based physicians who provide primary care services will receive higher payments while specialists who practice in hospital settings will receive lower reimbursements, on average. HCFA Administrator Nancy-Ann Min DeParle said that breaking the link between Medicare practice-expense payments and historical physician charges will create a fairer payment system. Studies found that the old charge-based system did not fairly compensate physicians for practice expenses, which are composed of direct and indirect expenses. Direct expenses include non- physician labor, medical equipment and medical supplies, while indirect expenses include the cost of office supplies and utilities; under the new system the cost of these elements have been allocated to each medical procedure. HCFA worked with the major medical societies, expert panels and information from the American Medical Association's Socioeconomic Monitoring Survey to estimate the direct expenses for various procedures and services. A relative value scale for physician work has been in place since the fee schedule was first instituted. The new relative values for practice expenses were mandated by Congress under the Balanced Budget Act of 1997 and slated for a four-year transition beginning in 1999. The third and final element of physician fees -- malpractice expenses -- will switch to a relative value system in 2000. DeParle said, "By making sure that Medicare pays physicians fairly, we help ensure that Medicare beneficiaries will continue to have broad access to the physicians they need to stay healthy and productive" (HCFA release, 10/30). See HCFA's website, www.hcfa.gov, for more details.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.