Bri
Order
Code
ion
IB85007
CRS- 1
ISSUE DEFINITION
Medicare's expenditures for physician services increased a t an average
annual rate of 20.6% over the 1979-1983 period.
As a n interim m e a s u r e . to
freeze o n
control escalating costs, Congress i n 1 9 8 4 approved a temporary
physicians' fees under the program.
The freeze period
was extended
for
so-called nonparticipating physicians through Dec. 3 1 , 1986, and lifted for
participating physicians effective May 1 , 1986.
On Oct. 2 1 , 1986, the President signed into law the Omnibus Budget
Reconciliation Act of 1986 (P.L.99-509).
This measure contains a number of
amendments to Medicare's
physician payment provisions.
It establishes
procedures for s e t t i n g . payment limitations based
on so-called
"inherent
reasonablenessw criteria and provides for a reduction in physician
payments
for cataract surgery. Further, the law establishes additional incentives for
physicians to become participating physicians.
On Jan. 5 , 1987, the President transmitted the proposed FY88 budget which
included several proposed modifications
to physician payment provisions.
Total savings attributable to these provisions were estimated at $200 million
in FY88.
BACKGROUND AND POLICY ANALYSIS
Part I 1
Part I of this report describes how Medicare pays physicians.
summarizes recent legislation affecting physician payments, including the
Deficit Reduztion Act of 1984 (DEFRA) and the Consolidated Omnibus Buaget
Reconciliation Act of 1985 (COBRA) and the Omnibus Budget Reconciliation Act
of 1986 (OBRA). Part I11
(OBRA) outlines OBRA implementation issces.
Part
IV summarizes the relevant proposals in the President's budget.
Part V
outlines the issues which have been identified with
the current payment
system. Part VI outlines reform options.
Part VII
lists congressionally
mandated reports.
I.
CURRENT PROGRAM
A. Description of Medicare Part B
Medicare is a nationwide health insurance program for 29 million aged and
nearly 3 million disabled individuals. The program consists of two separate
but complimentary types of health insurance.
Part A, the Hospital
Insurance
Program, provides
protection against hospital and related institutional
costs.
Part B , the Supplementary Medical Insurance Program, covers physician
services and a range of other health services including outpatient hospital
services, physical
therapy, diagnostic and x-ray
services, and durable
medical equipment.
Total Medicare outlays were $75.9 billion in FY86; of this amount $49.7
billion were Part A outlays and $26.2 billion were Part B outlays.
Of Part B
CRS- 2
IB85007
UPDATE-06/24/87
o u t l a y s , 7 2 % (75% of P a r t B e x p e n d i t u r e s f o r services) r e p r e s e n t e d p a y m e n t s f o r p h y s i c i a n s e r v i c e s ($18.8 billion).
Approximately
6 % of
this figure
represents payments for durable medical
equipment.
T h e Administration
e s t i m a t e s t h a t , i n t h e a b s e n c e of
legislation payments for physiciansq
s e r v i c e s w i l l t o t a l $23.8 billion i n F Y 8 8 (70% of P a r t B o u t l a y s , 7 2 % o f P a r t
B benefit p a y m e n t s , a n d 27% of total M e d i c a r e outlays).
Medicare
payments
represented 1 8 % of a l l physicians' i n c o m e s i n 1982.
charges on enrollees
P a r t B i s f i n a n c e d jointly through m o n t h l y premium
($17.90 i n 1987) a n d from g e n e r a l r e v e n u e s o f t h e Treasury.
T h e premium
1,
a m o u n t i s updated e v e r y January 1. F o r t h e 5-year period b e g i n n i n g Jan.
1 9 8 4 , e n r o l l e e p r e m i u m s m u s t equal 2 5 % o f t h e estimated c o s t o f c o v e r a g e f o r
t h e aged.
(The s a m e premiums a r e paid by
t h e disabled
t h o u g h per
capita
e x p e n d i t u r e s f o r t h i s g r o u p a r e higher.)
Federal general revenues finance
benefit p a y m e n t s a n d a d m i n i s t r a t i v e c o s t s n o t f i n a n c e d t h r o u g h premiums.
P h y s i c i a n s ' s e r v i c e s c o v e r e d by M e d i c a r e i n c l u d e t h o s e p r o v i d e d by d o c t o r s
of m e d i c i n e and o s t e o p a t h y , wherever
furnished, including those i n the
Also i n c l u d e d under
certain
o f f i c e , h o m e , h o s p i t a l s and o t h e r institutions.
l i m i t e d c o n d i t i o n s a r e services of:
dentists
(when p e r f o r m i n g
certain
s u r g e r i e s or t r e a t i n g o r a l infections), podiatrists (for c e r t a i n non-routine
f o o t care), o p t o m e t r i s t s (for s e r v i c e s to p a t i e n t s who l a c k t h e n a t u r a l
lens
of t h e eye), a n d c h i r o p r a c t o r s (for t r e a t m e n t i n v o l v i n g m a n u a l
manipulation
o f t h e s p i n e , u n d e r specified conditions).
"approved"
T h e P a r t B program generally pays 8 0 % of t h e " r e a s o n a b l e " o r
charge f o r c o v e r e d s e r v i c e s a f t e r t h e beneficiary h a s m e t t h e P a r t B a n n u a l
d e d u c t i b l e a m o u n t of $75. T h e beneficiary i s l i a b l e for t h e 2 0 % c o i n s u r a n c e
c h a r g e s , p l u s , i n c e r t a i n c a s e s , physicians'
charges in excess of
the
Medicare a p p r o v e d amount.
radiology,
F i v e s p e c i a l t i e s - - internal m e d i c i n e , g e n e r a l s u r g e r y ,
of M e d i c a r e
o p h t h a l n o l o g y , a n d g e n e r a l practice -- a c c o u n t for over half
physician spending.
Internal m e d i c i n e a l o n e a c c o u n t s f o r 20%.
Medical s e r v i c e s
(primarily physicians'
visits)
a c c o u n t s f o r 37% o f
(The r e m a i n i n g 29% i n c l u d e s
spending w h i l e
surgery a c c o u n t s f o r 34%.
d i a g n o s t i c laboratory and x-ray
s e r v i c e s , and
consultation).
Sixty-two
percent o f s p e n d i n g i s f o r services d e l i v e r e d i n hospital i n p a t i e n t
settings
w h i l e 29% i s for s e r v i c e s rendered i n physicians' offices.
(The r e m a i n i n g 9 %
i n c l u d e s s e r v i c e s r e n d e r e d i n hospital
o u t p a t i e n t d e p a r t m e n t s and
skilled
n u r s i n g facilities.)
57.8%
of
the
F o r t h e a g e d , M e d i c a r e spending a c c o u n t e d for a n e s t i m a t e d
per c a p i t a e x p e n d i t u r e s f o r physician s e r v i c e s in 1 9 8 4
($502 o u t of
total
$868).
Out-of-pocket spending by
t h e a g e d a c c o u n t e d f o r $227
(26.1%);
p r i v a t e i n s u r a n c e spending represented $117 (or 13.5%) a n d o t h e r g o v e r n m e n t
spending $22 (2.5%).
Medicare i s a d m i n i s t e r e d by
t h e Health
Care Financing Administration
(HCFA) w i t h i n t h e D e p a r t m e n t of Health a n d H u m a n S e r v i c e s
(DHHS).
The
day-to-day f u n c t i o n s o f reviewing P a r t B c l a i m s a n d p a y i n g b e n e f i t s a r e
performed by e n t i t i e s k n o w n a s "carriers."
These are generally Blue Shield
plans or c o m m e r c i a l i n s u r a n c e companies.
B. D e f i n i t i o n o f " R e a s o n a b l e t to r " A p p r o v e d " C h a r g e s
CRS- 3
Medicare pays for physician services on the basis of "reasonable charges."
Recently, HCFA has begun
calling these charges "approved charges.''
A
reasonable or approved charge for a
service
(in the absence of Unusual
circumstances) cannot exceed:
----
the actual charge for the service;
the physician's customary charge for the
service; and
the "prevailing charge" for similar services in the
locality (set at a level no higher than is necessary
to cover the 75th percentile of cu3_tomary charges).
Carriers delineate localities which are usually political
subdivisions of a State. There are 225 localities nationwide.
or
economic
Prior to 1 9 8 4 , customary and prevailing charge fee screens
(i.e.,
benchmarks against which individual charges are compared) were updated every
July 1. The annual update in the prevailing charge screens was subject to a n
economic index limitation. This limitation (expressed a s a maximum allowable
percentage increase) is tied to an economic index known as the Medicare
(MEI), which
reflects changes in operating expenses of
Economic Index
physicians and in earning levels.
Because the Deficit Re.duction Act of 1 9 8 4 (DEFRA) froze physicians'
fees
through Sept.
30, 1985, the annual increases i n the customary and prevailing
Subsequent
charge screens otherwise slated for July 1, 1 9 8 4 , did not occur.
fee screen updates were slated to occur on October 1 -of future years
beginning in 1985. However, the increase slated to occur on Oct.
1 , i985,
(P.L.
99-107, as
was postponed by the Temporary Extension Act of 1985
amended) and the Consolidated Omnibus Budget Reconciliation
Act of 1985
(COBRA).
Under .COBRA, the next update occurred on May
1 , 1 9 8 6 , for
participating physicians only.
Future updates for all physicians will occur
on Jan. 1 of each year beginning in 1987. Prevailing charges applicable
for
nonparticipating physicians will continue to be less than for participating
physicians.
C. =Definition of "Assignment"
Medicare payments are made either directly to the doctor or to the patient
depending upon whether the physician has accepted assignment for the claim.
In the case of assigned claims, the beneficiary assigns (i.e., transfers) his
right to payment from Medicare to the physician.
In return, the physician
agrees to accept Medicare's "approvedv or "reasonablew charge determination
as payment in full for covered services. The physician
bills
the program
directly and is paid an amount equal to 80% of Medicare's
reasonable or
approved charge (less any deductible, where applicable).
The patient
is
.liable for the 20% coinsurance. The physician may not charge the beneficiary
(nor can he collect from another party such a s a private insurer) more than
the applicable deductible and coinsurance amounts.
When a physician accepts
assignment, the beneficiary is therefore protected against having to pay any
difference between Medicare's approved charge and the physi.ciants actual
on an
charge.
In calendar year 1983, approximately 56% of claims were paid
assignment basis.
In 1984, the figure had risen to 59%.
By 1985, the figure
the
was 69%. This increase was primarily attributable to two factors
--
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IB85007
UPDATE-06/24/87
b e g i n n i n g o f t h e p a r t i c i p a t i n g p h y s i c i a n s program o n O c t o b e r 1 a n d
the
r e q u i r e m e n t t h a t c l a i m s f o r i n d e p e n d e n t l a b o r a t o r y s e r v i c e s b e assigned.
new
I n t h e c a s e of non-assigned c l a i m s i payment i s m a d e by M e d i c a r e d i r e c t l y
t o t h e beneficiary o n t h e b a s i s o f a n y itemized bill paid o r unpaid.
The
beneficiary i s r e s p o n s i b l e f o r p a y i n g t h e p h y s i c i a n ' s bill.
In a d d i t i o n t o
is liable for any
t h e d e d u c t i b l e a n d c o i n s u r a n c e a m o u n t s , t h e beneficiary
d i f f e r e n c e between t h e physician's
actual charge and Medicare's approved
charge.
A physician (except o n e w h o becomes a " p a r t i c i p a t i n g physician") may
a c c e p t o r r e f u s e r e q u e s t s f o r a s s i g n m e n t o n a bill-by-bill
basis, from
different patients a t different times, or from the same patient a t different
times.
H o w e v e r , h e i s precluded from "fragmenting" b i l l s f o r t h e p u r p o s e o f
c i r c u m v e n t i n g r e a s o n a b l e c h a r g e limitations.
He
must
either
accept
a s s i g n m e n t o r b i l l t h e patient f o r a l l o f t h e s e r v i c e s p e r f o r m e d o n a s i n g l e
occasion.
A d d i t i o n a l l y , when a physician
treats a patient who i s also
e l i g i b l e f o r M e d i c a i d , h e i s essentially
required to accept assignment.
T o t a l r e i m b u r s e m e n t f o r s e r v i c e s provided
to t h e s e d u a l e l i g i b l e s i s
e q u i v a l e n t t o t h e Medicare-determined r e a s o n a b l e c h a r g e w i t h Medicaid p i c k i n g
u p t h e r e q u i r e d d e d u c t i b l e a n d c o i n s u r a n c e amounts.
T h e l a w s p e c i f i e s that a physician w h o k n o w i n g l y , w i l l f u l l y ,
and
The
repeatedly v i o l a t e s h i s a s s i g n m e n t a g r e e m e n t i s guilty of a misdemeanor.
6
months'
penalty
f o r c o n v i c t i o n i s a maximum
$2,000 fine, up
to
i m p r i s o n m e n t , o r both.
P a r t i c i p a t i n g a n d Nonparticipating P h y s i c i a n s
A physician may
become a participating
physician.
A
participating
physician i s o n e w h o voluntarily enters i n t o a n a g r e e m e n t with t h e S e c r e t a r y
to a c c e p t a s s i g n m e n t f o r a l l s e r v i c e s provided to a l l Medicare p a t i e n t s f o r a
f u t u r e specified p e r i o d , g e n e r a l l y 1 2 months.
T h e f i r s t such period began
Oct. 1 , 1964.
T h e n e x t period began Oct. 1 , 1985. A s p e c i a l 8-month
period
F u t u r e 12-month periods will begin o n Jan. 1 of each y e a r
b e g a n May 1 , 1966.
beginning i n 1987. T h e l a w r e q u i r e s physicians t o sign u p prior t o t h e s t a r t
After that t i m e , only n e w p h y s i c i a n s i n a n a r e a
of t h e participation period.
o r newly licensed physicians may enter i n t o a p a r t i c i p a t i o n a g r e e m e n t u n t i l
t h e beginning o f the next d e s i g n a t e d t i m e period.
A physician who has signed
u p f o r o n e p a r t i c i p a t i o n period i s deemed
to h a v e s i g n e d u p f o r f u t u r e
p e r i o d s unless he t e r m i n a t e s h i s agreement.
A n o n p a r t i c i p a t i n g physician i s a physician w h o h a s n o t signed a v o l u n t a r y
A n o n p a r t i c i p a t i n g physician may a c c e p t a s s i g n m e n t
p a r t i c i p a t i o n agreement.
o n a case-by-case basis.
T h e l a w i n c l u d e s a n u m b e r of i n c e n t i v e s t o e n c o u r a g e p h y s i z i a n s to become
p a r t i c i p a t i n g physicians.
D u r i n g t h e f r e e z e period t h e primary i n c e n t i v e f o r
p h y s i c i a n s to p a r t i c i p a t e was t h e a b i l i t y to i n c r e a s e t h e i r billed
charges.
W h i l e i n c r e a s e s i n billed c h a r g e s did not r a i s e M e d i c a r e p a y m e n t s d u r i n g
the
f r e e z e p e r i o d , t h e s e c h a r g e s w i l l b e reflected i n t h e c a l c u l a t i o n of
future
c u s t o m a r y c h a r g e s c r e e n updates.
The freeze was lifted for participating
p h y s i c i a n s o n May 1 , 1 9 8 6 ; t h e s e physicians r e c e i v e d a n i n c r e a s e of 4.15%
in
t h e i r maximum a l l o w a b l e prevailing charges.
Nonparticipating physicians will
During the entire freeze
be s u b j e c t t o t h e f r e e z e through Dec. 3 1 , 1986.
p e r i o d , n o n p a r t i c i p a t i n g p h y s i c i a n s could n o t r a i s e t h e i r a c t u a l c h a r g e s
Thus, there are two
a b o v e t h e l e v e l s c h a r g e d d u r i n g April-June
1984.
CRS- 5
one for
prevailing charge levels applicable for physicians in a locality
physicians.
participating physicians and a lower one for nonparticipating
allowable
All physicians will receive a n increase of 3.2% in their maximum
prevailing charges, effective Jan. 1 , 1987.
In future y e a r s , the percent
increase in the ME1 would be applied to the previous prevailing
charge for
participating and nonparticipating physicians, respectively.
There will be a
permanent
differential
in
the
prevailing
charges
applicable
for
nonparticipating versus participating physicians.
- - '
1I
The freeze is lifted for nonparticipating physicians effective Jan.
1987.
However, these physicians will be subject to a limit o n their actual
charges. (This is referred to as the maximum
allowable actual charge or
MAAC).
Nonparticipating physicians, whose actual charge for a service in the
preceding year equals or exceeds 115% of the current , y e a r ' s prevailing
charge, could increase their actual charges by
1%.
Nonparticipating
physicians whose actual charge for the preceding year is below
115% of the
current year's prevailing charge would be subject to a limit;
they could
increase their actual charges over a 4-year period so that in the fourth year
the actual charge equals 115% of the prevailing charge.
The MAAC
for a
nonparticipating physician whose actual charge for a service in the previous
year is less than 115% of the current year prevailing charge is the dollar
amount which is th2 greater of:
(i) the amount 1% above the physician's
(ii) an amount based
on a comparison
previous year's actual charge; or
between the physician's MAAC for the previous year and 115% of the current
prevailing charge.
Under clause (ii), the MAAC for the current year equals
the previous year MAAC increased by a fraction of the difference between 115%
of the current year prevailing and the previous year MAAC.
The applicable
fractions are one-quarter, one-third, one-half and one for 1987, 1 9 8 8 , 1 9 8 9 ,
and 1 9 9 0 , respectively.
For example, if a physician's
1986 MhAC for a
service is $100, and 115% of the 1987 prevailing charge amount i s $ 1 2 4 , the
0.25($124
1987 MAAC for that physician for that service is $106
[$lo3 +
$100) 1
In addition to the payment
provisions, the law includes additional
incentives to become participating physicians.
These include the publication
of directories identifying participating physicians, and the maintenance by
carriers of toil-free telephone lines to provide beneficiaries with names of
participating physicians.
Further, beginning on Oct.
1,
1986,
all
"Explanation of Medicare
Benefits"
(EOMB) notices
sent
to
Medicare
beneficiaries on unassigned claims must
include a
reminder
of
the
participating physician and supplier program.
The law requires the Secretarx to monitor
charges of nonparticipating
physicians to determine compliance with the fee freeze and the MAAC limits
Nonparticipating physicians who do not comply with
the freeze or MAAC
limits could be subject to civil monetary penalties or assessments, exclusion
for up to 5 years from the Medicare
program, or both.
Civil monetary
penalties may be imposed in amounts up to $2,000 for each violation.
The
Secretary i s given authority to make restitution to the beneficiary
out of
the amounts collected for any excess payments by
the beneficiary.
The
restitution amount may not exceed either the excess amount the beneficiary
was charged or the amount collected from the physician.
The Secretary may
not impose the exclusion penalty in the case of a doctor who is the sole
physician serving a community or a physician providing essential specialized
services which would otherwise be unavailable.
Further, the Secretary, in
determining whether to bar a physician from the program, i s required to take
into account the access of beneficiaries to physician services.
CRS- 6
IB85007
UPDATE-06/24/87
H C F A r e p o r t s t h a t f o r the participation period beginning
Oct.
1 , 1985,
27.9% of p h y s i c i a n s billing Medicare w e r e p a r t i c i p a t i n g ,
32.2%
of
limited
license practitioners
i . .
c h i r o p r a c t o r s , d e n t i s t s , podiatrists)
were
For the
p a r t i c i p a t i n g , a n d 23% of Medicare s u p p l i e r s w e r e participating.
participation period beginning May 1 , 1 9 8 6 , 28.3%
of p h y s i c i a n s
(including
l i m i t e d licensed practitioners) a r e p a r t i c i p a t i n g a n d 19.0% o f s u p p l i e r s a r e
p a r t i c i p a t i n g , f o r a n o v e r a l l participation r a t e of 27.1%.
E.
"Inherent Reasonablenessw Guidelines
T h e l a w h a s permitted t h e S e c r e t a r y c e r t a i n f l e x i b i l i t y i n d e t e r m i n i n g
r e a s o n a b l e charges. R e g u l a t i o n s issued prior to CQBRA
allowed
the use of
" o t h e r f a c t o r s t h a t may b e f o u n d necessary a n d a p p r o p r i a t e w i t h r e s p e c t to a
particular item o r service...in
judging w h e t h e r
the charge i s inherently
reasonable."
C O B R A r e q u i r e d t h e Secretary t o p r o m u l g a t e r e g u l a t i o n s w h i c h
s p e c i f y explicitly t h e criteria of "inherent r e a s ~ n a b l e n e s s . ~ ~I m p l e m e n t i n g
1 6 , 1986.
r e g u l a t i o n s were
i s s u e d Aug.
P.L.
99-509 further clarified
c o n g r e s s i o n a l i n t e n t with r e s p e c t to this authority.
By l a w , t h e S e c r e t a r y i s a u t h o r i z e d to establish a p a y m e n t
limit for a
p h y s i c i a n ' s s e r v i c e b a s e 2 on considerations o t h e r than a c t u a l , c u s t o m a r y , o r
prevailing for t h e service. A d e p a r t u r e from t h e standard
is appropriate
under a number of specified circumstances i n c l u d i n g :he following:
--
--
--
Prevailing charges in a locality are significantly
in e x c e s s o f o r below prevailing c h a r g e s i n
other c o m p a r a b l e l o c a l i t i e s , t a k i n g i n t o a c c o u n t
t h e r e l a t i v e c o s t s of f u r n i s h i n g services.
Medicare and Medicaid a r e the s o l e or t h e primary
s o u r c e s f o r payment.
T h e m a r k e t p l a c e i s not truly competitive.
--
T h e r e h a v e been i n c r e a s e s in c h a r g e s f o r a s e r v i c e that
c a n n o t b e explained by i n f l a t i o n o r technology.
--
T h e c h a r g e s d o not r e f l e c t c h a n g i n g t e c h n o l o g y ,
increased f a c i l i t y with t h a t t e c h n o l o g y , o r
c h a n g e s i n a c q u i s i t i o n o r production costs.
. --
T h e p r e v a i l i n g charges f o r a s e r v i c e a r e s u b s t a n t i a l l y
higher o r l o w e r than than payments by other p u r c h a s e r s in
t h e s a m e locality.
T h e S e c r e t a r y i s a u t h o r i z e d to m a k e a n a d j u s t m e n t i n p a y m e n t i f i t i s
justified o n t h e basis of a n a p p r o p r i a t e c o m p a r i s o n o f r e s o u r c e c o s t s o r
charges.
An a d j u s t m e n t may be based
o n o n e of
t h e f o l l o w i n g t y p e s of
comparisons: c h a r g e s and r e s o u r c e c o s t s f o r r e l a t e d p r o c e d u r e s , c h a r g e s a n d
r e s o u r c e c o s t s f o r a procedure over a period of t i m e , c h a r g e s f o r a p r o c e d u r e
i n d i f f e r e n t g e o g r a p h i c a r e a s , and Medicare c h a r g e s a n d a l l o w e d p a y m e n t s f o r
a p r o c e d u r e c o m p a r e d to those o f other payors.
An a d j u s t m e n t i n prevailing c h a r g e s may be m a d e o n l y i f t h e S e c r e t a r y
d e t e r m i n e s t h a t a prevailing c h a r g e a l l o w e d i n a locality i s o u t o f l i n e w i t h
prevailing
c h a r g e s a l l o w e d i n other . l o c a l i t i e s a f t e r
accounting
for
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'differences in practice costs.
In determining whether to adjust payment rates, the Secretary would
be
required to consider
the potential impacts on quality,
access,
and
beneficiary liability including the likely affects o n assignment rates,
reasonable charge reductions on unassigned claims, and participation rates of
physicians.
The law specifies procedures the Secretary is required to follow i n the
case of a proposed modification in payments based o n inherent reasonableness
criteria.
If an adjustment is made which results i n a reduction in allowed
payments, a special limit on actual charges for nonparticipating physicians
would apply.
For the first year the reduction is in effect, the maximum
the inherently
allowable actual charge for the service equals 125% o f
reasonable charge level plus one-half
of the difference between
the
physician's actual charge in the preceding period and 125% of the inherently
reasonable charge.
In the second year, the maximum allowable charge for the
service equals 125% of the inherently reasonable charge level.
F. Cataract Surgery
Cataract surgery involves the removal (by various means)
of the natural
lens of the eye and replacement of the lens by
a prosthetic
(artificial)
lens. Prosthetic lenses include externally worn contact lenses, eyeglasses,
and most commonly, artificial lenses that are surgically implanted
in the
patient's eye. Cataract extraccions with an intraocular lens implant
(IOL)
currently account for 9 0 % of all cataract surgeries.
On Aug. 1 5 , 1 9 8 6 , the Department issued two proposed Notices
relating to
(see discussion of
the establishment of special reasonable charqe limits
inherent reasonableness
under A
above).
The first Notice
proposed
establishment of a limit for cataract extractions with (IOL) implants. Under
this Notice, a limit on cataract surgery with IOLs would be phased in over 3
years, so that for services furnished in calendar year 1989 a n 8 thereafter
the limit on prevailing charges would be Set at 110% of prevailing
charges
for cataract surgery without an IOL.
(A similar limit, with no phase-in
of the
period, was contained in the Energy and Commerce Committee version
5300).
In proposing
the limitation, the
1986 reconciliation bill, H.R.
Notice cited data from a variety of sources which
indicated
that cataract
procedures are overpriced. In addition, the Notice noted that HCFA had been
advised by opthalmologists that a cataract procedure with a n IOL takes only
about five additional minutes.
However, the prevailing
charge level i s
approximately 50% higher than that for cataract surgery without an IOL.
The
Department's second Notice proposed limits f o r anesthesia services related to
cataract surgery.
The Congress reviewed the proposed payment
limitations for cataract
surgery and provided for a different calculation than had been proposed
by
the Department.
UnCer the provisions of P.L.99-509,
the maximum allowable
prevailing
charges,
otherwise
recognized
for
participating
and
nonparticipating physicians performing a cataract surgical procedure, a r e to
be reduced by 1 0 % with respect to procedures performed i n 1987.
They are to
In no
be further reduced by 2% with respect to procedures performed in 1988.
case may the reduction for a surgical procedure result in a prevailing charge
that is less than 75% of the weighted national average of
such prevailing
charges for such procedure for all localities in the U.S. in 1986.
CRS- 8
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P.L. 9 9 - 5 0 9 r a t i f i e d t h e final r e g u l a t i o n s i s s u e d by t h e D e p a r t m e n t Oct.
7 , 1 9 8 6 , with r e s p e c t to a n e s t h e s i a s e r v i c e s r e l a t e d to c a t a r a c t
surgery.
T h i s regulation (which i s unchanged f r o m t h e proposed N o t i c e i s s u e d Aug.
15,
1986) s e t s l i m i t s o n r e a s o n a b l e c h a r g e p a y m e n t s f o r a n e s t h e s i a s e r v i c e s
f u r n i s h e d by p h y s i c i a n s during c a t a r a c t s u r g e r y and
iridectomies
(1-e.,
e x c i s i o n o f a p o r t i o n of t h e iris).
T h e r e g u l a t i o n i s e f f e c t i v e Jan.
1,
1987. Under c u r r e n t r e i m b u r s e m e n t r u l e s , c a r r i e r s c a l c u l a t e t h e r e a s o n a b l e
c h a r g e f o r a n e s t h e s i a services based o n t h e following:
--
--
B a s e u n i t s assigned to t h e s p e c i f i c p r o c e d u r e t h a t
r e p r e s e n t t h e value of a l l a n e s t h e s i a s e r v i c e s
e x c e p t t h e v a l u e of t h e a c t u a l t i m e s p e n t
a d m i n i s t e r i n g t h e anesthesia.
Generally carriers
a r e a s s i g n i n g a value of e i g h t b a s e u n i t s t o
the a n e s t h e s i a services a s s o c i a t e d with c a t a r a c t
s u r g e r y procedures.
T i m e u n i t s that represent t h e e l a p s e d period o f
time f r o m w h e n the a n e s t h e s i o l o g i s t p r e p a r e s
the p a t i e n t f o r induction a n d e n d i n g when t h e
anesthesiologist is no longer in personal
a t t e n d a n c e to the patient. O n e t i m e u n i t i s
a l l o w e d f o r each 1 5 m i n u t e interval.
- - T h e c a r r i e r may use modifier units that take
i n t o a c c o u n t special f a c t o r s such a s a g s o r
p h y s i c a l c o n d i t i o n of t h e patient.
A physician may a l s o b e reimbursed o n a r e a s o n a b l e c h a r g e b a s i s f o r t h e
personal medical d i r e c t i o n that h e f u r n i s h e s to a q u a l i f i e d a n e s t h e t i s t ; t o
r e c e i v e such p a y m e n t s , t h e physician may n o t d i r e c t more than f o u r c o n c u r r e n t
a n e s t h e s i a p r o c e d u r e s a t a time.
T h e regulation a l l o w s n o more than f o u r base u n i t s a s w e l l a s a p p r o p r i a t e
t i m e and modifier u n i t s f o r a n e s t h e s i a s e r v i c e s c o n n e c t e d with
cataract
surgery. T h e r e g u l a t i o n notes that a l m o s t a l l c a t a r a c t s u r g e r y i s n o w being
performed on a n a m b u l a t o r y basis.
G e n e r a l a n e s t h e s i a i s n o t o r d i n a r i l y used.
T h e regulation s t a t e s that most
surgery i s d o n e under
local anesthesia
administered by t h e o p t h a l m o l o g i s t w h i l e t h e a n e s t h e s i o l o g i s t i s r e s p o n s i b l e
f o r monitoring t h e p a t i e n t ' s condition. A s i m i l a r l i m i t o f
f o u r base
units
would be a l l o w e d f o r a n i r i d e c t o m y , which i s d e s c r i b e d a s n o m o r e
complex
than c a t a r a c t surgery.
The selection of
f o u r base u n i t s a s a
limit
units
r e p r e s e n t s o n e u n i t a b o v e the three unit-s which i s t h e l e a s t n u m b e r of
a s s i g n e d t o most s u r g i c a l procedures performed o n a n a m b u l a t o r y
basis.
The
estimated s a v i n g s r e l a t e d to t h e c a t a r a c t s u r g e r y portion o f t h i s r e g u l a t i o n
The
i s estimated to b e $45 million i n F Y 8 7 r i s i n g t o $105 million i n FY91.
s a v i n g s related to i r i d e c t o m i e s would b e u n d e r $1 million
in FY87; higher
a n n u a l s a v i n g s a r e n o t projected
f o r f u t u r e years.
The regulation also
a l l o w s no m o r e t h a n t h r e e base units f o r each p r o c e d u r e i n t h o s e c a s e s i n
which
t h e a n e s t h e s i o l o g i s t i s performing
more
than
four
concurrent
H C F A w a s unable to e s t i m a t e t h e
savings attributable
to this
procedures.
p r o p o s a l , but i n d i c a t e d i t would probably n o t b e substantial.
11.
RECENT LEGISLATION
R e c e n t l e g i s l a t i o n , beginning with t h e e n a c t m e n t of D E F R A
in
1984,
made
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UPDATE-06/24/87
'significant m o d i f i c a t i o n s i n t h e physician p a y m e n t p r o v i s i o n s of Medicare.
A.
P.L. 9 8 - 3 6 9 , t h e D e f i c i t R e d u c t i o n Act o f 1984 (DEFRA)
O n J u l y 1 8 , 1 9 8 4 , t h e P r e s i d e n t signed i n t o l a w t h e D e f i c i t R e d u c t i o n
Act
T h i s legislation f r o z e p h y s i c i a n s ' f e e s u n d e r M e d i c a r e
for
o f 1984 (DEFRA).
t h e 15-month p e r i o d , J u l y 1 , 1 9 8 4 , t h r o u g h Sept. 3 0 , 1985.
Therefore, the
a n n u a l updating o f c u s t o m a r y a n d prevailing c h a r g e s c r e e n s , o t h e r w i s e s l a t e d
f o r J u l y 1 , 1 9 8 4 , d i d n o t occur.
Subsequent f e e screen updates were slated
N o catch-up
would
t o o c c u r o n O c t o b e r 1 of f u t u r e y e a r s b e g i n n i n g i n 1985.
b e permitted to a c c o u n t for a n y e c o n o m i c i n d e x i n c r e a s e t o t h e p r e v a i l i n g
c h a r g e s c r e e n t h a t w o u l d o t h e r w i s e h a v e o c c u r r e d d u r i n g t h e f r e e z e period.
T h e l a w a l s o established
the concept of participating physicians and
The law
s p e c i f i e d t h a t t h e f i r s t participation period began Oct. 1 , 1984.
provided t h a t participating physicians were s u b j e c t t o t h e 1 5 - m o n t h
freeze.
T h e y w e r e , h o w e v e r , permitted to i n c r e a s e their billed
charges during the
f r e e z e period.
W h i l e i n c r e a s e s i n billed c h a r g e s would
not raise Medicare
p a y m e n t s during t h e f r e e z e p e r i o d , these c h a r g e s would b e
reflected i n the
c a l c u l a t i o n of f u t u r e customary
f e e s c r e e n updates.
The law included
additional incentives for physicians who agreed
to become
participating
physicians.
T h e s e included
t h e publication
o f directo'ries i d e n t i f y i n g
participating p h y s i c i a n s and t h e m a i n t e n a n c e by c a r r i e r s o f t o l l f r e e l i n e s
t o p r c v i d e b e n e f i c i a r i e s with n a m e s of participating physicians.
increase
T h e l a w specified that n o n p a r t i c i p a t i n g physicians
could n o t
t h e i r billed c h a r g e s d u r i n g t h e 15-month
f r e e z e period
over
the amounts
c h a r g e d f o r the s a m e services d u r i n g the Apr. 1 , 1 9 8 4 , through J u n e 3 0 , 1 9 8 4 ,
period.
F o r e x a s p l e , if during that period a physician
charged
$22 for a
s e r v i c e and X e d i c a r s ' a r e a s o n a b l e c h a r g e was
$ 2 0 , he c o u l d S i l l t h e
beneficiary the 20% c o i n s u r a n c e ($4) plus (if h e did n o t a c c e p t a s s i g n m e n t o n
t h i s claim) the $2 in excess of t h e r e a s o n a b l e charge.
During
the freeze
p e r i o d , t h e n o n p a r t i c i p a t i n g physician's f e e i s f r o z e n a t $ 2 2 -- he c q n n o t
r a i s e h i s c h a r g e s to b e n e f i c i a r i e s in a n a t t e m p t to c i r c u m v e n t t h e freeze.
T h e l a w r e q u i r e d t h e Secretary
to m o n ~ t o r c h a r g e s of nonparticipatin,g
p h y s i c i a n s and s p e c i f i e d penalties for those w h o f a i l e a to c o m p l y w i t h
the
freeze.
T h e l e g i s l a t i o n a u t h o r i z e d p a y m e n t s from t h e P a r t B t r u s t f u n d t o c a r r i e r s
of n o l e s s than $ 8 million in F Y 8 4 and $ 1 5 m i l l i o n i n F Y 8 5 to e n a b l e them
to
meet t h e i n c r e a s e d c o s t s of a c t i v i t i e s required under t h e n e w law.
B.
Temporary Extensions
During 1985 and early 1985, the Congress considered several alternative
p r o p o s a l s to modify a n d extend t h e physician
payment
p r o v i s i o n s o f DEFRA.
B o t h t h e H o u s e - p a s s e d a n d Senate-passed
reconciliation bills
contained
r e l a t e d p r o v i s i o n s , t h o u g h t h e bill w a s n o t e n a c t e d u n t i l Apr. 7 , 1986.
D u r i n g c o n s i d e r a t i o n of r e c o n c i l i a t i o n l e g i s l a t i o n t h e r e w a s c o n c e r n t h a t
t h e f r e e z e on n o n p a r t i c i p a t i n g p h y s i c i a n s would
expire and
then
be
r e i n s t i t u t e d s h o r t l y thereafter.
T o avoid this situation, Congress approved
which
extended
the f e e
t h e Emergency E x t e n s i o n Act of 1 9 8 5 (P.L. 99-107),
f r e e z e provisions through Nov.
1 4 , 1985.
Subsequently i t approved
four
a m e n d m e n t s t o t h a t A c t , further e x t e n d i n g t h e f r e e z e p r o v i s i o n s , a s follows:
P.L.
P.L.
o P.L.
o P.L.
0
0
C. P.L.
99-155
99-181
99-189
99-201
----
--
extended
extended
extended
extended
through
through
through
through
Dec.
Dec.
Dec.
Mar.
14,
18,
19,
14,
1985.
1985.
1985.
1986.
9 9 - 2 7 2 , C o n s o l i d a t e d O m n i b u s B u d g e t R e c o n c i l a t i o n A c t o f 1 9 8 5 (COBRA)
7 , 1 9 8 6 , t h e P r e s i d e n t signed i n t o l a w P.L.
99-272, the
O n Apr.
C o n s o l i d a t e d O m n i b u s Budget R e c o n c i l i a t i o n Act o f
1985.
This
bill
represented t h e culmination of l e g i s l a t i v e a c t i v i t y o n t h e P r e s i d e n t ' s F Y e 6
p r o p o s a l s f o r Medicare a n d c e r t a i n o t h e r programs.
-budget
-As
noted, this
legislation makes several significant modifications t o the Medicare physician
payment provisions.
Under C O B R A , t h e existing payment p r o v i s i o n s w e r e extended
through April
1986. I n April 1 9 8 6 , physicians w e r e g i v e n a n o p p o r t u n i t y t o c h a n g e t h e i r
p a r t i c i p a t i o n s t a t u s f o r t h e 8-month period beginning May
1 , 1986.
Future
update and p a r t i c i p a t i o n c y c l e s will begin o n Jan. 1 of each y e a r , beginning
i n 1987.
P h y s i c i a n s c o v e r e d under participation a g r e e m e n t s on May 1 , 1 9 8 6 , r e c e i v e d
updates
i n t h e i r customary and prevailing
charges.
Physicians
who
participated i n F Y 6 5 S u t a r e n o t participating f o r the period
beginning
May
Far physicians
participating
1 , 1 9 6 6 , had t h e i r customary eharges updated.
during n e i t h e r p e r i o d , the existing
f r e e z e o n customary
and prevailing
c h a r g e s w a s extended through Dec. 3 1 , 1986. T h e f r e e z e o n a c t u a l c h a r g e s w a s
extended f o r a l l nonparticipating p h y s i c i a n s f o r t h e same period.
m
r,.e
h
c u s t o m a r y a n d prevailing c h a r g e s c r e e n c?dates a p p l i e d o n May 1 , 1 9 6 6 ,
a r e those which would have o c c ~ r r e don Oct. 1 , 1 9 6 5 , e x c e p t f o r p o s t p o n e n t s
provided
f o r under
temporary
extension
legislation.
To
compensate
participating physicians for t h e d e l a y , t h e Medicare
Economic
Index was
increased by o n e percentage point increase.
T h i s i n c r e a s e w a s n o t built
permanently i n t o t h e prevailing c h a r g e leveis.
(See m o d i f i c a t i o n
contained
i n P . L . 9 9 - 5 0 9 , discussed Selow.!
CCSRA provided t h a t , beginning Jan. 1 , 1 9 6 7 , n o n p a r t i c i p a t i n g p h y s i c i a n s
would be s u b j e c t to the prevailing c h a r g e l i m i t s applied
to participating
physicians d u r i n g t h e preceding
p a r t i c i p a t i o n period.
(See m o d i f i c a t i o n
contained i n P.L. 9 9 - 5 0 9 , discussed below.)
The law required publication of
directories
(rather than a
single directory, a s previously
required)
i d e n t i f y i n g p a r t i c i p a t i n g physicians.
In a d d i t i o n , t h e
"Explanation of
Medicare B e n e f i t s " (EOMB) n o t i c e s s e n t t o b e n e f i c i a r i e s i s r e q u i r e d , f o r
n o n a s s i g n e d c l a i m s , to i n c l u d e a r e m i n d e r of t h e p a r t i c i p a t i n g p h y s i c i a n a n d
supplier program.
COBRA a l s o provided f o r t h e e s t a b l i s h m e n t o f a n i n d e p e n d e n t P h y s i c i a n
P a y m e n t R e v i e w Commission.
T h e mission
and ongoing duties a r e to make
r e c o m m e n d a t i o n s regarding Medicare
p h y s i c i a n payments.
The
Commission
members w e r e a p p o i n t e d o n J u n e 1 1 , 1986.
The law also required the Secretary, with the advice of the Commission, t o
d e v e l o p a r e l a t i v e v a l u e s c a l e (RVS) f o r p h y s i c i a n payments (see P a r t IV f o r
a d i s c u s s i o n o f RVSs).
T h e S e c r e t a r y i s r e q u i r e d to c o m p l e t e t h e d e v e l o p m e n t
of t h e R V S a n d r e p o r t to C o n g r e s s o n i t s d e v e l o p m e n t by J u l y
1 , 1987.
The
r e p o r t i s t o i n c l u d e r e c o m m e n d a t i o n s c o n c e r n i n g i t s potential a p p l i c a t i o n
to
Medicare on or after Jan. 1 , 1988.
(See P.L.
COBRA also includes the following
payment for physician services:
--
--
D.
99-509 modification.)
additional
provisions
relating
to
The law has permitted the Secretary certain flexibility
in determining reasonable charges. Regulations allowed
the use of "other factors that may be found necessary
and appropriate with respect to a specific item or
service...
i n judging whether the charge is inherently
reasonable."
COBRA required the Secretary to
promulgate regulations which specify explicitly the
criteria of "inherent reasonableness."
COBRA made technical corrections with respect to the
calculation of customary charges for certain former
hospital-compensated physicians.
--
COBRA required the Secretary to provide for separate
payment amount determinations for cataract eyeglasses
and cataract contact lenses and for the professional
services related to them. The Secretary is to apply
inherent reasonableness guidelines in determining the
reasonableness of charges for such eyeglasses and
lenses.
--
COBRA denied Medicare payment for assistants-at-surgery
in a cataract operation unless prior approval is
obtained from the peer review organization (PRO) or
Medicare carrier.
Such assistants cannot bill Medicare
or the beneficiary for services which do not receive
prior approval; nor can the primary physician bill for
such services. COBRA further required the Secretary to
report to Congress by Jan. 1 , 1 9 8 7 , recommendations and
guidelines regarding other surgical procedures for which
an assistant-at-surgery is not generally medically
necessary.
Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509)
On Oct. 1 7 , 1 9 8 6 , the Conference Committee issued its report o n H.R. 5300.
On the same date, the measure passed the House and the Senate.
The bill was
signed into law by the President on Oct. 21, 1 9 8 6 , as the Omnibus Budget
Reconciliation Act of 1986 (P.L. 99-509).
Title IX of this law contains
Medicare provisions, including several amendments to the physician
payment
requirements.
The following is a summary of the major
physician
payment
provisions included in the law.
1.
Payment Provisions
Under current law, a fee freeze went into effect July 1984; the freeze was
lifted for participating physicians May
1 , 1986.
It will be lifted for
nonparticipating physicians Jan. 1 , 1987.
Annual incr.eases
(except during
the freeze period),
in prevailing charges are limited by
the Medicare
Economic Index
(MEI),
which
reflects general inflation and changes in
physicians office practice costs.
The law includes a number of amendments to
the physician payment provisions, a s follows:
2.
--
B e g i n n i n g i n 1 9 8 7 , a l l participating a n d a l l
nonparticipating physicians will receive an
i n c r e a s e i n their prevailing c h a r g e l e v e l s ,
a b o v e t h o s e i n e f f e c t f o r t h e p r e v i o u s period
equal t o 3.2%.
In 1988 and future years,
p r e v a i l i n g c h a r g e s would b e i n c r e a s e d by t h e
p e r c e n t a g e i n c r e a s e i n t h e MEI.
--
T h e o n e p e r c e n t a g e p o i n t i n c r e a s e o v e r t h e MEI,
which w a s a l l o w e d f o r participating p h y s i c i a n s
f o r t h e period beginning May 1 , 1 9 8 6 , i s built
i n t o t h e b a s e f o r f u t u r e calculations.
--
T h e S e c r e t a r y c o u l d n o t retrospectively r e v i s e t h e
c a l c u l a t i o n o f t h e ME1 (as had been r e c o m m e n d e d by
t h e Administration). T h e S e c r e t a r y i s r e q u i r e d t o
c o n d u c t a study of t h e ME1 to e n s u r e t h a t t h e
i n d e x r e f l e c t s e c o n o m i c changes in a n a p p r o p r i a t e
a n d e q u i t a b l e manner.
T h e S e c r e t a r y i s precluded
from c h a n g i n g t h e methodology used to d e t e r m i n e
t h e ME1 u n t i l c o m p l e t i o n of t h e study.
--
Nonparticipating physicians hlill be s u b j e c t t o a l i m i t
o n their a c t u a l c h a r g e s when t h e f r e e z e i s l i f t e d Jan.
1 , 1987.
(This i s referred t o a s t h e maximum
a l l o w a b l e a c t u a l c h a r g e o r MAAC).
Nonparticipating physicians, whose actual charge
f o r a s e r v i c e i n t h e preceding y e a r e q u a l s o r
exceeds 1 1 5 % of t h e c u r r e n t y e a r ' s prevailing
c h a r g e , c o u l d i n c r e a s e their a c t u a l c h a r g e s by
1%.
Nonparticipating physicians w h o s e a c t u a l
c h a r g e f o r t h e preceding year i s below 1 1 5 % of
t h e c u r r e n t y e a r ' s prevailing c h a r g e would b e
s u b j e c t to a l i m i t ; they could i n c r e a s e their
a c t u a l c h a r g e s over a 4-year period s o that
i n t h e f o u r t h year t h e a c t u a l c h a r g e e q u a l s
1 1 5 % of t h e prevailing charge. C a r r i e r s a r e
required to p r o v i d e each n o n p a r t i c i p a t i n g
physician with a l i s t o f MAACs f o r t h e p r o c e d u r e s
most c o m m o n l y provided by t h e physician a t t h e
beginning of each year.
--
By J u l y 1 , 1 9 8 9 , t h e Secretary i s r e q u i r e d , a f t e r
appropriate notice and.consultation, to consolidate
t h e p r o c e d u r e c o d e s contained i n t h e H C F A C o m m o n
P r o c e d u r e C o d i n g System (HCPCS) f o r payment
purposes.
Incentives for Participation
The l a w makes the following additional changes to encourage physicians
become p a r t i c i p a t i n g physicians:
--
A l e t t e r i s t o be s e n t a n n u a l l y to each b e n e f i c i a r y ,
in the beneficiary's social security check, reminding
b e n e f i c i a r i e s of t h e participating p h y s i c i a n
program a n d o f f e r i n g a copy o f t h e p a r t i c i p a t i n g
to
physician directory.
The letter i s t o indicate
t h a t a f r e e copy would b e s e n t o n request.
--
Carriers a r e required to implement programs to
r e c r u i t a n d r e t a i n p h y s i c i a n s as p a r t i c i p a t i n g
physicians.
C a r r i e r s a r e a l s o r e q u i r e d to
implement programs to familiarize beneficiaries
w i t h t h e p a r t i c i p a t i n g physician program a n d
a s s i s t them i n l o c a t i n g p a r t i c i p a t i n g physicians.
An i n c e n t i v e pool, equal t o 1 % o f t o t a l
p a y m e n t s t o c a r r i e r s f o r c l a i m s processing w i l l
be a v a i l a b l e t o reward c a r r i e r s f o r t h e i r s u c c e s s
in increasing the percentage of participating
p h y s i c i a n s i n t h e carrier's s e r v i c e area.
--
A
--
--
physician i s r e q u i r e d to r e f u n d o n a timely b a s i s
a n y beneficiary p a y m e n t s c o l l e c t e d i n c o n n e c t i o n w i t h
a non-assigned claim when t h e s e r v i c e i s d e t e r m i n e d
by a peer r e v i e w o r g a n i z a t i o n o r c a r r i e r to b e
medically unnecessary. A refund would n o t b e
r e q u i r e d if: (1) t h e physician d i d n o t k n o w , a n d
could n o t reasonably be expected t o h a v e k n o w n ,
t h a t t h e s e r v i c e would be f o u n d u n n e c e s s a r y ; o r
( 2 ) t h e beneficiary w a s i n f o r m e d i n a d v a n c e t h a t
Medicare payment would n o t be made.
Where the actual charge fcr a nonassigned elective
s u r g i c a l p r o c e u r e e x c e e d s $ 5 0 0 , t h e physician
i s required to d i s c l o s e to the i n d i v i d u a l i n
w r i t i n g , t h e estimated c h a r g e , t h e estimated
a p p r o v e d c h a r g e , t h e excess of t h e p h y s i c i a n ' s
a c t u a l c h a r g e o v e r the a p p r o v e d c h a r g e , a n C t h o
a p p l i c a b l e c o i n s u r a n c e amount.
The wrltten
e s t i m a t e may n o t b e used a s e v i d e n c e i n a c i v i l
suit.
H o s p i t a l s a r e require? to m a k e a v a i l a b l e t h e appropriate
participating physician d i r e c t o r y , a n d w h e r e r e f e r r a l
i s m a d e to a n o n p a r t i c i p a t i n g p h y s i c i a n , i n f o r m t h e
beneficiary of t h e fact. W h e r e v e r p r a c t i c a b l e ,
t h e h o s p i t a l must identify a p a r t i c i p a t i n g
physician from whom t h e patient c a n r e c e i v e t h e
n e c e s s a r y services.
I n h e r e n t R e a s o n a b l e n e s s ; P a y m e n t s f o r C a t a r a c t Surgery.
COBRA r e q u i r e d t h e S e c r e t a r y t o p r o m u l g a t e r e g u l a t i o n s w h i c h
specify
explicitly t h e c r i t e r i a of " i n h e r e n t r e a s o n a b l e n e s s u f o r d e t e r m i n i n g M e d i c a r e
payments
t o p h y s i c i a n s ; t h e A d m i n i s t r a t i o n proposed
to a p p l y
inherent
reasonableness guidelines to cataract procedures in order to reduce Medicare
the
payments f o r t h e s e services. P.L. 9 9 - 5 0 9 a u t h o r i z e s t h e S e c r e t a r y u n d e r
i n h e r e n t r e a s o n a b l e n e s s a u t h o r i t y , t o e s t a b l i s h a payment l e v e l f o r p h y s i c i a n
services based o n c r i t e r i a o t h e r than t h e a c t u a l , c u s t o m a r y , a n d p r e v a i l i n g
c h a r g e f o r t h e service.
The law specifies criteria and procedures
for
a d j u s t i n g p a y m e n t levels. T h e S e c r e t a r y i s r e q u i r e d t o r e v i e w , by Oct.
1,
1987, the inherent reasonableness of payments for 1 0 of
the most
costly
procedures paid f o r u n d e r P a r t B.
T h e l a w r e d u c e s by
1 0 % the prevailing
charges for cataract
surgical
p r o c e d u r e s performed i n 1 9 8 7 ; i n 1 9 8 8 , t h e prevailing c h a r g e i s r e d u c e d by
2%. I n n o c a s e could t h e r e d u c e d prevailing c h a r g e l e v e l b e l o w e r t h a n 7 5 % of
t h e n a t i o n a l a v e r a g e prevailing charge.
4.
R e c o m m e n d a t i o n s f o r R e l a t i v e Value S c a l e
COBRA r e q u i r e d t h e S e c r e t a r y , with t h e a d v i c e of t h e n e w l y
established
(RVS) f o r
P h y s i c i a n P a y m e n t C o m m i s s i o n , to d e v e l o p a r e l a t i v e v a l u e s c a l e
physician payments. T h e l a w d e f e r s t h e d a t e t h e S e c r e t a r y i s r e q u i r e d to
r e p o r t o n t h e R V S t o J u l y 1 , 1989. T h e p o t e n t i a l a p p l i c a t i o n d a t e of t h e R V S
T h e law further requires the
i s deferred u n t i l a f t e r Dec.
3 1 , 1989.
S e c r e t a r y , i n m a k i n g r e c o m m e n d a t i o n s f o r a p p l i c a t i o n o f a n R V S to:
(1)
d e v e l o p and a s s e s s a n a p p r o p r i a t e i n d e x t o r e f l e c t
justifiable geographic
variations in
practice
cost$
without
exacerbating
the
geographic
maldistribution of physicians; and
(2) a s s e s s
the
advisability
and
f e a s i b i l i t y o f d e v e l o p i n g a n a p p r o p r i a t e a d j u s t m e n t to a s s i s t i n a t t r a c t i n g
a n d r e t a i n i n g p h y s i c i a n s in medically u n d e r s e r v e d areas. T h e S e c r e t a r y i s to
d s v e l o p a n interim g e o g r a p h i c i n d e x by J u l y 1 , 1 9 8 7 , a n d c o l l e c t d a t a f o r
r e f i n i n g t h e i n d e x by Dec. 3 1 , 1989.
R a d i o l o g y , Anesthesiology and P a t h o l o g y S e r v i c e s S t u d y
31,
T h e Secretary i s required t o study and r e p o r t to C o n g r e s s by
July
1 9 8 7 , concerning t h e design a n d r m p l e m e n t a t i o n of a p r o s p e c t i v e p a y m e n t
System for payment under P a r t B f o r r a d i o l o g y , a n e s t h e s i o l o g y , a n C p a t h o l o g y
(RAP) s e r v i c e s f u r n i s h e d to hospital inpatients. T h e r e p o r t i s to i n c l u d e
d a t a , f r o m a r e p r e s e n t a t i v e s a m p l e , showing f o r d i s c h a r g e s c l a s s i f i e d within
total reasonable
each diagnosis-related group (DRG), the d i s t r i b u t i o n of
Charges a n 8 c o s t s for each i n p a t i e n t discharge.
1 1 1 . Implementation of O B R A
I n December 1 9 8 6 , t h e D e p a r t m e n t issued i n s t r u t i o n s to Medicare
carriers
pertaining to i m p l e m e n t a t i o n o f t h e p a r t i c i p a t i n g physician p a y m e n t a n d t h e
maximum a l l o w a b l e a c t u a l c h a n g e s (MAAC) p r o v i s i o n s of OBRA.
On Dec.
24,
1 9 8 6 , t h e American Medical Association f i l e d a l a w s u i t i n t h e U.S.
District
C o u r t for the Northern D i s t r i c t of T e x a s c o n c e r n i n g i m p l e m e n t a t i o n o f t h e
OBRA provisions.
I t requested a preliminary i n j u n c t i o n t o d e l a y the d e a d l i n e
beyond Jan. 1 , 1 9 8 7 f o r signing u p a s a participating physician.
A temporary
r e s t r a i n i n g o r d e r w a s granted o n Dec. 3 1 , 1987. On Jan. 2 0 , 1 9 8 7 , t h e c o u r t
dissolved the t e m p o r a r y restraining order.
Subsequently, the Department
notified c a r r i e r s t h a t physicians had u n t i l Jan. 3 0 , 1 9 8 7 , t o d e c i d e w h e t h e r
t o participate i n 1987.
P a y m e n t would be m a d e a c c o r d i n g to t h e r e q u i r e m e n t s
of l a w ( i - e . , n o n p a r t i c i p a t i n g physicians a r e s u b j e c t to a prevailing
charge
l e v e l equal to 9 6 % of that f o r participating p h y s i c i a n s , e f f e c t i v e Jan.
1,
1987).
IV. P r e s i d e n t ' s F Y 8 8 Budget
On Jan. 5 , 1987, the President transmitted the proposed F Y 8 8 Budget which
included several proposed modifications
to physician
payment provisions.
Total savings attributable to these provisions were estimated at $200 million
i n FY88.
The following outlines these provisions.
A. Prospective Payment of Radiology, Anesthesiology, and Pathology Services
Provided by Physicians to Hospital Inpatients (so-called RAP proposal)
Under current l a w , payments are made
reasonable charges per unit of service.
to
physicians
on
the
basis
of.
The budget proposal would modify the mechanism used to pay for radiology,
anesthesiology, and pathology (RAP) services provided to hospital inpatients.
Medicare would pay a n average rate per discharge for all RAP
services
associated with the diagnostic category.
The fee-for-service
payment methodology
has been
characterized
as
inherently inflationary.
As
a
result
several
alternative
payment
methodologies are being studied. One alternative which has been examined
is
that of making pre-determined payments b y diagnosis-related groups (DRGs) for
physician services provided to hospital inpatients.
However, a number
of
concerns have been raised with respect to implementation of
this approach
(see discussion of DRG approach, Part VII, B below).
It has been
suggested
that it may be approp.riate to institute payment reforms for a more narrowly
defined classification' of services. RAPS have been
selected for several
reasons including their close connection with hospitals and the fact that
Competitive forces do not operate with respect to utilization cf RAP services
since patients d o not generally select their RAP provider.
The specifics of the Administration proposal are not currently available.
A number of questions could be raised with
regard to its implementation
including how will the payment amount be calculated; to whom will the payment
be made; how will beneficiary cost-sharing charges be
calculated; and will
there be limits on charges that physicians will be able to bill patients
in
excess of the recognized payment amount.
Over half of the members
of both
House of Congress are cosponsors of resolutions
(H.Con.Res.
30, S.Con.Res.
1 5 , and S.Con.Res. 56) opposing this approach.
B. Additional Physician Payment Reforms
The Budget included the following additional reform Proposals:
--
Reduce prevailing charges for cataract surgery by a n
additional 13% in FY88 (OBRA provided for a 10% reduction
in FY87 and 2% i n FY88);
--
Establish customary charges for new physicians a t
approximately 80% of the prevailing charge;
(they are currently set a t 75% of customary changes);
-- ' P r o v i d e reductions
for physicians charges that are
overpriced compared with other procedures; charges
t h a t vary excessively from o n e l o c a t i o n to a n o t h e r ;
and global surgical fees that d o not reflect recent
r e d u c t i o n s i n hospital l e n g t h s o f s t a y ; a n d
--
P l a c e l i m i t s o n prevailing c h a r g e s f o r c e r t a i n
m e d i c a l o r s u r g i c a l s e r v i c e s (excluding v i s i t s o r
consultations) wher.e t h e r e i s a l a r g e d i s p a r i t y
b e t w e e n t h e c h a r g e s o f s p e c i a l i s t a n d non-specialist.
V.
C U R R E N T SYSTEM I S S U E S
T o t a l Medicare o u t l a y s r o s e a t a n a v e r a g e a n n u a l r a t e o f 18.2%
over
the
FY79-FY83 period.
P a r t A o u t l a y s i n c r e a s e d a t a n a v e r a g e r a t e of 17.3% w h i l e
20.6%
over the same
P a r t B o u t l a y s i n c r e a s e d a t a n a v e r a g e a n n u a l r a t e of
period.
For a number of years, Part A outlays received the most attention
both because o f t h e r e l a t i v e s i z e o f t h e P a r t A program
($49.7
billion
in
and because of the potential
F Y 8 6 compared t o $26.2 billion f o r P a r t B )
exhaustion of the Part A Hospital Insurance trust fund
(the p r o j e c t e d
exhaustion d a t e of t h e P a r t A t r u s t fund i s currently
1996).
Part B
is
"currently financefl" through e n r o l l e e premiums a n d F e d e r a l g e n e r a l revenues.
T h e Part B t r u s t f u n d will not technically g o broke b e c a u s e premium
amounts
a n d general r e v e n u e c o n t r i b u t i o n s a r e a u t o m a t i c a l l y i n c r e a s e d each
year.
However, the rapid cost increases and the resulting impact on the Federal
budget have caused increasing concern. S i n c e a p p r o x i m a t e l y t h r e e - q u a r t e r s o f
P a r t B o u t l a y s a r e f o r physician s e r v i c e s , t h e primary f o c u s h a s been on w a y s
t o c u r b these expenditures.
I n i t i a l l y , consideration w a s given
to r e f i ~ i n g
t h e e x i s t i n g ' r e i m b u r s e m e n t system.
However, more recently attention has
turned to c o n s i d e r a t i o n of a l t e r n a t i v e payment methodologies.
and
COBRA,
M e d i c a r ~ ~ s basic
D e s p i t e t h e c h a n g e s made by D E F R A
fee-for-service payment system h a s remained relatively
unchanged
since the
program's inception.
P a y m e n t s a r e m a d e , s u b j e c t to c e r t a i n l i m i t a t i o n s ,
for
each service rendered.
It, has been suggested t h a t both t h e i n d i v i d u a l p r i c e s
a n d the unit of payment (i.e., t h e i n d i v i d u a l service) a r e i n f l a t i o n a r y a n d
permit certain distortions.
T h e system h a s a l s o been criticized for f a i l i n g
to provide a d e q u a t e protection f o r t h e elderly
against rising physicians'
fees.
A. P r i c e s f o r I n d i v i d u a l S e r v i c e s
As noted i n P a r t I , Medicare pays f o r i n d i v i d u a l s e r v i c e s o n t h e b a s i s o f
" a p p r o v e d w o r " r e a s o n a b l e " charges.
R e a s o n a b l e c h a r g e s c a n n o t exceed
the
physician's c u s t o m a r y c h a r g e o r t h e prevailing c h a r g e f o r t h e s e r v i c e i n t h e
comnunity.
A n n u a l i n c r e a s e s in recognized prevailing
charge levels a r e
s u b j e c t t o t h e economic
index limitation
(which i s e x p r e s s e d
as
a
percentage).
P h y s i c i a n s ' f e e s generally h a v e increased a t a f a s t e r r a t e t h a n
t h e economic index.
Between 1 9 7 3 a n d 1 9 8 4 , t h e e c o n o m i c i n d e x j n c r e a s e d by
1 0 6 % w h i l e physician f e e s , a s measured by t h e physician s e r v i c e s c o m p o n e n t o f
t h e Consumer P r i c e I n d e x (CPI), increased 157%.
T h u s each y e a r a n i n c r e a s i n g
percentage
of physicians'
customary
c h a r g e s a r e l i k e l y to exceed
the
index-adjusted
prevailing
charge.
I n these c a s e s , t h e
index-adjusted
prevailing c h a r g e l e v e l s a r e d e t e r m i n i n g t h e a p p r o v e d p a y m e n t amounts.
It is
estimated that a s i g n i f i c a n t n u m b e r , t h o u g h l e s s than one-half of p h y s i c i a n s t
c h a r g e s a r e s u b j e c t t o t h e economic i n d e x limitation.
The
index-adjusted
prevailing
charge
levels
are
serving,
in
many
Pocalities, as de facto fee schedules.
F e e schedules are set payment amounts
for each service.
(For example, if the f e e schedule amount is $20 for a n
initial brief office visit, this is the amount paid for the visit
regardless
of the p h y s i c i a n q s charge.)
The de facto fee schedules, which
vary considerably
throughout the
country, reflect and lock into place historical imbalances in charging
patterns.
Many feel that the payment imbalances in the current system have
encouraged physicians to locate in high-income areas, to choose specialty
over primary care practice, to treat patients in hospitals
rather--than
outpatient settings and to perform surgical rather than medical procedures.
The following are some of the major problems which have been cited:
--
General Practitioner/S~ecialist Differential.
Considerable variation exists in fees recognized by
the program for certain medical services performed
by physicians in general practice versus fees for
similar services performed by specialists. For
example, the prevailing charge for a routine follow-up
office visit may be $25 for a general practitioner and
$30 for a specialist.
In the 1 9 8 4 fee screen year
(i.e., July 1 , 1983, through June 3 0 , 1984), Medicare
carriers recognized specialty reimbursement
differentials in all areas of t3e country except for
Florida, the area of Kansas served by Blue Shield of
Kansas, North Dakota, South Dakota and the area of New
York served by Blue Shield of Western New York.
The specialist/generalist differential recognized by
Medicare and many private insurers was originally
intended to reflect the fact that specialists may
provide a different type or higher quality of service.
However, there is concern that these fee differentials
may not be warranted and may have encouraged increased
specialization. Further, these differentials mean
that Medicare is paying significantly more for what
many feel are comparable services.
For example, in fee
screen year 1954, the mean prevailing charge for specialists
was 16% higher than that for generalists for a "brief
follow-up hospital visit" and 24% higher for a "brief
follow-up office visit."
Neither Medicare nor the medical community generally
has established a single uniform definition for the
A recent report by the General
term specialist.
Accounting Office (GAO/HRD-84-94, Sept. 27, 1984)
reviewed how carriers establish prevailing rate
structures and identified several problems areas.
It
stated that H C F A had given little guidance to the carriers
in determining whether specialty recognition was
warranted for particular procedures, and in turn,
the carriers had conducted little or no analyses.
The report cited wide differences in the way carriers
recognize physician specialties in establishing
prevailing rates.
Some carriers did not recognize
any specialties and had only one prevailing rate for
a particular procedure; others developed prevailing
charges for each specialty individually; while still
others combined numerous specialties into several
prevailing rate groups.
The report noted that the
use of more than one prevailing r a t e could lead to
significant variations among specialties.
F o r example,
for the f e e screen year beginning J u l y 1 , 1 9 8 1 , t h e
a
n
prevailing rate f o r a " C O n ~ ~ l t a t i Orequiring
comprehensive history" in an urban a r e a of
Massachusetts ranged from $40.00 f o r a general
practitioner to $89.50 f o r a cardiologist o r pulmonary
disease specialist.
T h e G A O report a l s o reviewed t h e practice of
"self-designation" -- i.e,, a physician may classify
himself a s specialist without necessarily being
board certified (i-e., certified by the specialty
organization a s having met certain training and
competency requirements).
In a review of three
carriers, i t was noted that approximately one-half of
the physicians who. self-designated specialties were
not board certified i n that specialty and about
one-fourth of the physicians who designated
subspecialties in internal medicine were not even
board-certified in internal medicine.
--
Geographic Variations.
Significant variations exist
by geographic area in physicians' f e e s recognized
by Medicare for the same service.
Differences occur
between urban and rural a r e a s , among the States and
between various regions. For e x a m p l e , a n analysis
of f e e screen year 1 9 8 4 data showed that f o r a brief
follow-up hospital visit (one of the most frequently
billed services) the prevailing charge ranged from
$8.30 in o n e locality i n Wisconsin to $50 i n New York
C i t y , a difference of 500%.
Such differentials a r e
not totally justified by cost-of-living differences.
They a l s o reflect historical charge patterns.
--
Failure of Prices to Fall a s Pricing Patterns Change.
Physicians' charges for new procedures are generally
set a t a high level reflecting the fact that n e w
procedures may initially require special skills and
a substantial amount of a physician's time.
However,
the charge accepted for a new procedure becomes the
base for future increases.
Physicians generally do
not lower their charges even though increased
experience, higher volume, and.technologica1 changes
have actually lowered costs. An example of such
charging patterns which i s frequently cited i s that
of coronary artery bypass surgery which i s now a
frequently performed procedure (50,000 under Medicare
in 1982) but one whose charges have remained
relatively high.
--
Variations by Place of Performance.
Physicians'
services provided i n a n inpatient hospital setting
a r e generally associated with higher reimbursement
levels.
F o r example, i n f e e screen year 1 9 8 4 , the mean
prevailing charge for a "brief follow-up visit performed
by a general practitioner was 21% higher i n a hospital
than i n a n office.
Similarly f o r t h e same s e r v i c e .
performed by a specialist, the a v e r a g e prevailing
charge w a s 12% higher i n a hospital than i n a n
office.
While hospitalized patients may r e q u i r e
more intensive c a r e , t h e physician does n o t bear t h e
associated office c o s t s such a s overhead.
Costs to
a physician a r e lower f o r services performed i n a
hospital outpatient department compared t o a n office.
T h e T a x Equity and F i s c a l Responsibility Act o f 1 9 8 2
(P.L. 97-248) authorized the Secretary t o l i m i t t h e
r e a s o n a b l e charge f o r s e r v i c e s furnished i n a
hospital outpatient department t o a percentage of
the prevailing charge f o r similar services f u r n i s h e d
i n a n office.
T h e implementing regulations s e t t h e
limit a t 60%.
--
Medical Visit/Surgical ( ' t C o g n i t i ~ e / P r ~ ~ e d ~ r a l " )
Differentials.
Hospital-based procedures,
particularly surgical procedures and those r e q u i r i n g
substantial fixzd equipment (such a s certain
diagnostic tests) a r e generally priced higher t h a n
office-based services.
T h i s raises t h e c o n c e r n t h a t
tae existing payment mechanism may encourage t h e u s e
of s e r v i c e s which not only command high physicians'
f e e s but a l s o consume l a r g e a m o u n t s of support and
technical resources.
T h e parallel concern i s t h a t
the system may discourage physicians
from spending time with patients to counsel or examine
them.
T h e resulting payment imbalances a r e s o m e t i m e s
referred t o a s the "cognitive/procedural differential"
though t h i s term may be misleading.
A f e w attempts h a v e been made to determine t h e relative
value of surgical procedures a n d medical o f f i c e visits
on the basis of resource costs a s opposed to charges.
A study by William H s a i o and William Stason (HCFA
R e v i e w , F a l l 1979) focused on the professional t i m e
expended and the complexity of the service.
After
standardizing for complexity between selected
procedures, the study showed that physicians w e r e paid
a s much a s 4 - 5 times more per hour f o r hospital-based
surgery than f o r office visits.
A follow-up s t u d y
using 1 9 8 3 data (as outlined in testimony b e f o r e
the S e n a t e Finance Committee Dec. 6 , 1985), showed
that values of surgical procedures relative t o o f f i c e
visits a r e , a t a minimum, 2 or 3 t i m e s higher when
calculated on the basis of charges than when
c a l m l a t e d from r e s o u r c e inputs.
B. Unit of P a y m e nt
Another concern with the c u r r e n t reimbursement methodology
i s Medicare's
u s e of a n i n d i v i d u a l service a s t h e payment unit.
F o r e x a m p l e , physicians
c a n bill separately f o r a n i n i t i a l o f f i c e v i s i t , a follow-up o f f i c e v i s i t a n d
f o r each individual l a b t e s t or x-ray
procedure performed.
While some
surgeons a r e essentially paid a s i n g l e comprehensive f e e f o r a n i n p a t i e n t
c a s e , t h e majority of a l l physician payments a r e made f o r s m a l l units of
service.
I t has been argued that i n t h i s environment physicians
are not
discouraged from providing additional s e r v i c e s (such a s l a b o r a t o r y tests),
ordering a d d i t i o n a l consultations, or performing a d d i t i o n a l surgeries.
While
t h e s e a c t i o n s may
n o t be o u t s i d e t h e broad
range of accepted medical
p r a c t i c e , o t h e r l e s s c o s t l y a l t e r n a t i v e t r e a t m e n t p a t t e r n s may be e q u a l l y , o r
i n s o m e c a s e s m o r e appropriate.
F u r t h e r c o m p o u n d i n g the i n f l a t i o n a r y e f f e c t i s t h e p h e n o m e n o n k n o w n a s
" u n b u n d l i n g , " i.e., billing s e p a r a t e l y f o r s e r v i c e s p r e v i o u s l y
consolidated
i n t o a l a r g e r u n i t o f payment.
I t h a s been a r g u e d t h a t t h e t o t a l a m o u n t t h e
program pays f o r such m u l t i p l e i n d i v i d u a l s e r v i c e s f r e q u e n t l y e x c e e d s t h e
a m o u n t which would
h a v e been paid
i f t h e y had b e e n g r o u p e d u n d e r a n
i n d i v i d u a l s e r v i c e c a t e g o r y , i.e., "bundled."
Unbundling i s f r e q u e n t l y cited
a s o n e o f the m o r e s i g n i f i c a n t c o n t r i b u t o r s to i n f l a t i o n i n e x p e n d i t u r e s f o r
p h y s i c i a n services.
I t h a s a l s o been suggested t h a t e x i s t i n g c o d i n g p o l i c i e s may
be
somewhat
inflationary.
P r o c e d u r e c o d e s f o r s o m e high v o l u m e s e r v i c e s such a s o f f i c e
v i s i t s a r e n o t p r e c i s e l y defined.
It may t h e r e f o r e be p o s s i b l e t o d e s c r i b e
t h e s a m e s e r v i c e by a c o d e w i t h a higher a l l o w a b l e c h a r g e , f o r e x a m p l e a
'*brief visit" might become a n " i n t e r m e d i a t e visit."
T h i s phenomenon h a s been
l a b e l e d "=code creep=.''
There is also some question whether
the increased
n u m b e r o f i n d i v i d u a l procedure c o d e s (rising f r o m 2 , 0 0 0 - 2 , 5 0 0 i n 1966 to o v e r
6 , 0 0 0 today) may a l s o f a c i l i t a t e c o d e creep.
T h e i m p a c t of these i n c r e a s e s i s r e f l e c t e d in d a t a o n t h e c o m p o n e n t s of
i n c r e a s e s i n r e c o g n i z e d c h a r g e s per enrollee
f o r physician
services.
The
1 9 8 6 Annual R e p ~ r to f the Board of T r u s t e e s of
t h e S u p p l e m e n t a r y Medics1
I n s u r a n c e T r u s t F u n d d i s a g g r e g a t e s i n c r e a s e s i n e x p e n d i t u r e s per e n r o l l e e f o r
p h y s i c i a n s e r v i c e s i n t o two components:
p r i c e i n c r e a s e s per u n i t of
service
a n d " n e t r e s i d u a l factors."
T h e latter c o m p o n e n t i n c l u d e s i n c r e a s e s i n
e x p e n d i t u r e s d u e to a d d i t i o n a l physician s e r v i c e s per e n r o l l e e , g r e a t e r u s e
of s p e c i a l i s t s , u s e of more e x p e n s i v e t e c h n i q u e s and t e c h n o l o g y , a n d
other
of
t h e total
factors.
F o r the y e a r ending J u n e 3 0 , 1 9 8 4 , a b o u t one-third
p e r c e n t a g e i n c r e a s e i n physician e x p e n d i t u r e s per e n r o l l e e was d u e to t h e
" n e c r e s i d u a l f a c t o r s " (3.2% o u t o f a t o t a l o f 11.6%).
F o r the y e a r ending
Sept. 3 0 , 1 9 8 5 , when t h e f r e e z e w a s i n e f f e c t , these r e s i d u a l f a c t o r s w e r e
expected to a c c o u n t f o r 8 4 % of the total i n c r e a s e per e n r o l l e e (5.2% o u t of a
t o t a l 6.2%).
V o l u m e i n c r e a s e s , u n b u n d l i n g , a n d c o d e c r e e p a r e thus i m p o r t a n t f a c t o r s i n
d e t e r m i n i n g t h e l e v e l of overall
expenditures
for p h y s i c i a n
services.
S e v e r a l s t u d i e s h a v e s h o w n that when l i m i t s a r e placed
on allowable fees,
i n c r e a s e s i n t h e s e r e s i d u a l f a c t o r s may
result.
Experience during the
E c o n o m i c S t a b i l i z a t i o n (ESP) program during t h e early 1 9 7 0 s i s f r e q u e n t l y
cited a s a n i l l u s t r a t i o n of t h i s phenomenon.
Analysis by t h e Urban I n s t i t u t s
of t h e E S P program i n C a l i f o r n i a showed that physicians c o u n t e r e d a t t e m p t s to
c o n t r o l prices by i n c r e a s i n g t h e v o l u m e of s e r v i c e s provided a n d c h a n g i n g
to
a m o r e c o m p l e x s e r v i c e mix.
I n f a c t , g r o s s Medicare
incomes of these
p h y s i c i a n s a c t u a l l y i n c r e a s e d m o r e d u r i n g t h e 2 y e a r s o f p r i c e c o n t r o l s than
in t h e y e a r a f t e r t h e c o n t r o l s w e r e lifted.
P h y s i c i a n s h a v e had
c o n s i d e r a b l e d i s c r e t i o n i n d e t e r m i n i n g price a n d
v o l u m e of services.
I t i s estimated
t h a t physicians'
decisions
(such a s
o r d e r i n g h o s p i t a l i z a t i o n , d r u g s or l a b o r a t o r y tests) d i r e c t l y i n f l u e n c e o v e r
70% o f a l l health c a r e expenditures.
C. P a t i e n t Liability
Physicians' d e c i s i o n s
about
pricing
and
billing
also
have
a
direct
economic impact on patients.
All patients are liable for the 20% coinsurance
charges though Medicaid or private Medi-Gap insurance may pick
up some of
these costs.
In addition, when the physician does not accept assignment,
beneficiaries are liable for amounts in excess of Medicare's approved or
reasonable charge, an amount fr'equently not picked up by private
insurance
policies.
The difference between the physician's
billed
charge and Medicare's
aproved or reasonable charge is referred to a s the reasonable charge
reduction.
Reasonable charge reductions were made on 84.5%
of unassigned
The amount of the reduction was 25.9% of billed
charges or
claims in FY85.
$33.37 per approved claim.
Beneficiaries were liable for these reduction
amounts.
(Comparable figures were recorded for assigned claims though the
beneficiaries were not liable for the reduction amounts.)
The impact of reasonable charge reductions on unassigned claims is spread
unevenly across the population.
Nationwide, 59% of claims were paid on a n
assignment basis in 1984. The AMA Center for Health Policy Research reported
that for physicians who treated
some Medicare
patients
in 1 9 8 4 , 83.9%
accepted assignment for at least some patients, a n increase over the 75.6%
recorded in 1982.
In 1984, 32.1% of physicians always accepted assignment,
and 16.1% never accepted assignment. Physician assignment behavior varied by
region and by specialty.
Physicians have been able to accept or refuse
assignment
on
a
claim-by-claim basis.
However, under the provisions of DEFRA, physicians may
become "participating physicians." As of this time, data is not available on
how the implementation of the participating physician provision has affected
beneficiary out-of-pocket payments.
VI.
REFORM OPTIONS
For several years, both the Congress and the Administration
have been
exploring alternative approaches to dealing with escalating expenditures
for
physician
services under Medicare.
Proposals for a 1-year freeze on
customary a n C prevailing charges were rejected for several years primarily
because of the concern that more physicians would refuse assignment, thereby
passing along to the beneficiary the costs not met by the program.
In 1983, the House Ways and Means Committee reported the Tax Reform Act.
have placed
a
The reported bill included a committee amendment which would
1-year freeze on physicians'
fees for services provided
to
hospital
inpatients and would have required physicians to accept assignment for such
services.
The provision was to be subject to a separate vote when the bill
reached the House floor.
In the intervening period, the American
Medical
Association announced a voluntary
1-year
freeze on physicians'
fees and
launched a s'trong campaign against mandatory
assignment.
The mandatory
assignment provision was defeated by a voice vote on Apr. 1 2 , 1984.
The Deficit Reduction Act of 1984 included a 15-month freeze
on
physicians' fees and established the concept of
"participating" physicians.
The provision attempted to protect beneficiaries from increased liability
in
connection with non-assigned
claims
by
prohibiting
nonparticipating
physicians from raising their billed charges during the freeze period.
The
fee freeze was extended through Apr. 30, 1986, for participating
physicians
and Dec. 3 0 , 1986, for nonparticipating
physicians.
However, the freeze
provisions were v i e w e d a s a n interim a p p r o a c h u n t i l
c a n be i n c o r p o r a t e d i n t o t h e system.
more
permanent
changes
S e r i o u s consideratio'n of major r e f o r m s h a s been hampered by
a number of
factors. T h e s e i n c l u d e major g a p s i n t h e d a t a o n w h a t
t h e program
is
currently paying f o r , opposition by a n u m b e r o f p h y s i c i a n s to a major
a l t e r a t i o n i n t h e fee-for-service/ v o l u n t a r y a s s i g n m e n t a p p r o a c h , a n d
the
uncertainty c o n c e r n i n g the a c t u a l i m p a c t o f m a j o r r e f o r m s o n both t h e program
a n d beneficiaries.
H o w e v e r , i n a d d i t i o n to rising f i s c a l c o n c e r n s , c h a n g e s both i n t h e h e a l t h
s e r v i c e s m a r k e t p l a c e a s a w h o l e a n d t h e M e d i c a r e program
itself have
g e n e r a t e d i n c r e a s i n g i n t e r e s t i n reform options.
The health
services
m a r k e t p l a c e i s i n c r e a s i n g l y s u b j e c t to c o m p e t i t i v e pressures.
This is
r e f l e c t e d i n i n c r e a s i n g competition a m o n g p h y s i c i a n s i n r e s p o n s e t o t h e
d e v e l o p i n g o v e r s u p p l y (estimated by t h e G r a d u a t e Medical
Education National
Advisory C o m m i t t e e a t 6 3 , 0 0 0 i n 1 9 9 0 ; t h e i n c r e a s i n g e m p h a s i s g i v e n by
e m p l o y e r s to o b t a i n i n g l o w e r cost i n s u r a n c e p r o t e c t i o n ; t h e g r o w t h i n t h e
n u m b e r of health m a i n t e n a n c e o r g a n i z a t i o n s (HMOs); a n d
the rapid rise of
services a r e
preferred provider organization (PPO) a r r a n g e m e n t s under which
provided to s u b s c r i b e r s a t discounted prices.
At
t h e s a m e t i m e t h a t these c h a n g e s a r e o c c u r r i n g ,
Medicare
is
implementing a major n e w prospective payment system (PPS) f o r h o s p i t a l s which
i s r e p l a c i n g t h e earlier " r e a s o n a b l e cost" r e i m b u r s e m e n t system.
Under
PPS,
h o s p i t a l s a r e paid a predeternined r a t e f o r each i n p a t i e n t stay based on t h e
pa.tientts c l i n i c a l a n d demographic cllaracteristics a n d t h e n a t u r e of
th@
t r e a t m e n t received.
T h e classification
system used
to g r o u p h o s p i t a l
p a t i e n t s i s k n o w n a s D i a g n o s i s R e l a t e 2 G r o u p s (DRGs).
T h e system i s being
phased in over a 4-year period beginning o n Oct. 1 , 1983.
[For a discussion
of prospective p a y m e n t , see CRS I s s u e Brief 8 3 1 7 1 , P r o s p e c t i v e P a y m e c t s f o r
Medicare Inpatient H o s p i t a l Services.]
T h e P?S
system h a s a l t e r e d
the
e c o n o m i c i n c e n t i v e s f o r hospitals by
encouraging
them t o k e e p p a t i e n t s
hospitalized f o r a s short a period a s i s medically necessary a n d
t o perform
a s f e w tests a n d procedures a s a r e needed while t h e patient i s h o s p i t a l i z e d .
P?S
a r e thus
significantly
T h e economic i n c e n t i v e s for hosptals under
d i f f e r e n t from t h o s e f o r physicians w h o a r e providing a n d o r d e r i n g
services
i n t h e i n p a t i e n t setting.
T h e s e c h a n g e s h a v e served to f o c u s a t t e n t i o n o n a l t e r n a t i v e w a y s o f
c h a n g i n g t h e e x i s t i n g economic i n c e n t i v e s for physicians
by
changing the
method of payment.
S t u d i e s of a number of o p t i o n s a n d
related issues a r e
c u r r e n t l y being c o n d u c t e d by H C F A , t h e O f f i c e of T e c h n o l o g y A s s e s s m e n t , a n d
o t h e r public a n d p r i v a t e entities.
T h e major a l t e r n a t i v e s which a r e being examined a r e f e e s c h e d u l e s , p a y i n g
f o r physician s e r v i c e s o n t h e basis of D R G s , or paying
for services on a
c a p i t a t i o n , i.e., per p e r s o n , basis.
Reforms in the existing system could be
r e s t r i c t e d t o s e r v i c e s provided
in
an
inpatient
hospital
setting
to all
(approximately 6 2 % of physicians'expenditures) o r could be a p p l i e d
physicians' services.
P a y m e n t r e f o r m s might be taken e i t h e r a p a r t f r o m o r i n
c o n c e r t with r e f o r m s i n t h e c u r r e n t a s s i g n m e n t system.
Finally, reforms
c o u l d b e i n c l u d e d a s p a r t o f more e x t e n s i v e r e f o r m s i n t h e M e d i c a r e p r o g r a m
a s a whole.
A.
Fee Schedules
Fee schedules a r e set payment amounts for each service.
F o r example, i f
this i s the
the f e e schedule a m o u n t is $20 f o r a n initial office visit,
amount paid
regardless of the physician's charge.
As noted earlier,
Medicare's limit o n year-to-year increases i n prevailing charges
i e , the
economic index limit) has led in effect t o the use of d e f a c t o f e e schedules
i n some localities.
These de facto f e e schedules a r e more often reflective
of historical charging patterns rather that actual i n p u t costs.
One option f o r revising Medicare's
reimbursement system would be to
replace the current d e facto f e e schedules based o n local charging patterns
with a uniform f e e schedule. This would have the advantage of removing t h e
wide fluctuations i n payments for similar services though certain a r e a w i d e
a d j u s t m e n t s f o r cost-of-living differentials might be permitted.
Physicians
would k n o w i n advance what Medicare's payment would be.
At
the same t i m e ,
Medicare would
have
some control over the amount paid
f o r individual
services.
However, this approach would
have l e s s impact on
overall
expenditures unless controls on intensity and volume were a l s o incorporated
i n the n e w system.
There a r e several methods which
have been
suggested f o r developing a
uniform f e e schedule. The schedule could be based o n a relative value s c a l e ,
existing charging patterns, or negotiation with
representatives of
the
physician community.
These methods a r e not mutually exclusive.
Elements
of
a l l three are frequently incorporated in discussions of a f e e schedule based
on a relative value s c a l e (RVS).
A RVS i s a method of valuing individual services in relationship to each
other. Each service i s assigned an abstract index number or weight.
For
example, a n initial office visit could be assigned a value and other services
assigned higher or l o w e r numbers to indicate their
"value" relative to an
initial office visit.
A RVS i s not a f e e scheeule.
It is translated into a
f e e schedule by use of a predetermined
"conversion factor" or multiplier.
For example, if the multiplier was 4 , an initial office visit with a relative
value of 4.9 would be priced at $19.60.
RVSs a r e frequently discussed in terms of a
system which
could reflect
ineividual t i m e , s k i l l , and overhead c o s t s that each
service requires.
Ultimately the goal would be to establish RVSs which a r e economically neutral
in terms of what services a r e performed, the setting where
services a r e
rendered, and the region in which the physician practices.
However, to d a t e , R V S s have generally
been
developed on
the basis
of
charges. The best
known RVS was developed
by
the California Medical
Association (CMA).
T h e California R V S (CRVS) was
established
i n 1 9 5 6 and
subsequently revised several times.
T h e most recent editions were based
on
f e e data derived from files of third party payers in the State.
Attempts
were not made to a d j u s t the charge data based
o n potential
measures
of
relative "value." S e v e r a l other professional
societies, some Blue Shield
plans, and some commercial insurance companies a l s o developed RVSs
though
many of these were based on the California model.
The use and development of RVSs was generally halted by
the antitrust
action of the Federal Trade Commission (FTC) i n 1979.
T h e F T C issued a
consent notice which required the CMA to cease publishing, promulgating, o r
participating i n the use of RVSs; f u r t h e r , previously issued schedules had to
b e withdrawn.
In early 1 9 8 5 , the F T C issued a n advisory letter to the
American Society of
Internal Medicine
expressing the concern that R V S s
developed by medical societies could be viewed a s price f i x i n g schemes.
S e v e r a l s t u d i e s a r e u n d e r w a y , which a t t e m p t t o d e t e r m i n e
the relative
v a l u e s o f s e r v i c e s based o n physician t i m e , c o m p l e x i t y o f s e r v i c e a n d s i m i l a r
factors. A n u m b e r of s e g m e n t s o f organized m e d i c i n e h a v e e x p r e s s e d
strong
i n t e r e s t i n d e v e l o p i n g o r a s s i s t i n g i n t h e d e v e l o p m e n t o f a n RVS.
A study by t h e Urban I n s t i t u t e ("Final R e p o r t o n A l t e r n a t i v e M e t h o d s o f
Services, October
1984)
D e v e l o p i n g a R e l a t i v e Value S c a l e o f Physicians'
a t t e m p t e d to e x p l o r e a l t e r n a t i v e m e a n s of
c o n s t r u c t i n g RVSs.
The first
y e a r ' s study c o n c l u d e d that- cost-related i n f o r m a t i o n o n s u c h f a c t o r s a s t i m e
per p r o c e d u r e , c o m p l e x i t y , s e v e r i t y , a n d r e s o u r c e c o s t s a r e i n s u f f i c i e n t
to
a l l o w timely d e v e l o p m e n t of a r e l i a b l e cost-based RVS.
The authors concluded
t h a t u s e of charge-based d a t a w a s t h e p r e f e r a b l e alternative.
T h e report
s u g g e s t e d t h a t a n c o n s e n s u s development" p r o c e s s (i.e., g r o u p d e c i s i o n m a k i n g )
could serve a useful role in the review, evaluation, and adjustment of an RVS
based o n charges.
U s i n g t h i s a p p r o a c h , a p a n e l would m o d i f y t h e i n d e x v a l u e s
w h i c h a p p e a r e d o u t o f l i n e based o n o t h e r m e a s u r e s o f v a l u e
such a s
process.
The
p r o d u c t i o n costs.
T h e f i n a l r e p o r t recommended a three-step
scale
f i r s t s t e p would b e t o d e v e l o p a r e l a t i v e c o s t s c a l e b a s e d o n a
modified from r e l a t i v e c h a r g e s u s i n g limited c o s t i n f o r m a t i o n a n d
experts'
a s s e s s m e n t s of each service's profitability.
T h e second s t e p w o u l d
be
to
c o n v e r t the r e l a t i v e cost s c a l e i n t o a r e l a t i v e value s c a l e based
primarily
o n insurers' v i e w s of s e r v i c e s benefits, a p p r o p r i a t e n e s s f o r s u b s c r i b e r s ,
r i s k s , e f f i c a c y , a n d spillover i m p l i c a t i o n s f o r other
services and
costs.
T h e f i n a l step i n v o l v e s converting
the realtive value
scale into a
fee
schedule.
A k e y i s s u e i n t h e establishment of a f e e s c h e d u l e i s t h e d e t e r m i n a t i o n o f
t h e payment unit.
If separately i d e n t i f i a b l e p a y m e n t s c o n t i n u e d t o b e m a d e
f o r each i n d i v i d u a l s e r v i c e , t h e existing i n c e n t i v e s for u n b u n d l i n g ,
code
c r e e p , a n d v o l u m e would
remain.
It may
b e possible
to counter these
i n c e n t i v e s by d e f i n i n g common services m o r e precisely a n d d e f i n i n g c o m p o n e n t s
of services a s part of s i n g l e m o r e c o m p r e h e n s i v e units.
However, there are
s o m e t e c h n i c a l problems related to defining s o m e larger p a c k a g e s of
services
particularly f o r a m b u l a t o r y care.
~ i s s u e s r e l a t e s to t h e i n i t i a l l e v e l a t w h i c h
fees are
A second s e of
established.
I m p l e m e n t a t i o n of a uniform p a y m e n t a m o u n t w o u l d m e a n
that
there would be s o m e " w i n n e r s " a n d s o m e " l o s e r s " under t h e n e w
s y s t e m , i.e.,
s o m e persons would r e c e i v e higher
payments a n d
some would
receive lower
p a y m e n t s than t h e y would under t h e c u r r e n t system.
If d e s i r e d , t h i s e f f e c t
c o u l d be partially o f f s e t through a phase-in
approach
though this could
r e s u l t i n higher o v e r a l l expenditures.
I t i s expected t h a t a f e e s c h e d u l e would b e established
with a
certain
t a r g e t budget a m o u n t i n mind.
T h e c o n v e r s i o n f a c t o r would t h e r e f o r e n e e d
to
b e c a l c u l a t e d t o r e f l e c t projections of v o l u m e , unbundling a n d o t h e r changes.
A third s e t of i s s u e s r e l a t e s to t h e d i f f e r e n t i a l s , if a n y , w h i c h w o u l d b e
permitted by s p e c i a l t y , s e t t i n g w h e r e t h e s e r v i c e s a r e r e n d e r e d o r g e o g r a p h i c
area.
T h e o r e t i c a l l y , t h e f e e s c h e d u l e could b e d e s i g n e d i n such a w a y a s t o
a l t e r c e r t a i n e c o n o m i c i n c e n t i v e s i n t h e c u r r e n t system.
For example, the
m u l t i p l i e r a m o u n t might b e i n c r e a s e d f o r m e d i c a l visit p r o c e d u r e s a n d l o w e r e d
f o r s u r g i c a l procedures.
T h e f e e s c h e d u l e a m o u n t s might b e
established
on
a
competitive
basis.
Doctors could bid proposed conversion factors to Medicare
with
the parogram
accepting a certain percentage of the bids.
For those whose bids were not
accepted, beneficiary cost-sharing might be higher.
Additional incentives
might be included for participating physicians.
Several recent developments have occurred with respect to development of
a n RVS.
On Jan. 1 5 , 1986, the Department of Health and Human Services
entered into a 30-month cooperative agreement with
Harvard University
for
development of an RVS.
William Hsiao is the principal investigator and the
The R V S i s to be based on
American Medical.Association is a subcontractor.
resource costs taking into account time, complexity, opportunity costs, and
overhead.
During the development of the R V S , it is also expected
that
procedures will be identified which are currently overpriced or underpriced.
As noted
earlier, COBRA, a s modified
by P.L.
99-509, required the
Secretary, with the advice of the newly established Physician Payent Review
Commission, to develop a RVS and report to Congress on its development by
July 1 , 1989. The report is to include recommendations
concerning its
potential application to Medicare on or after Jan. 1 , 1990.
B. Physician DRGs
As noted above, the Social Security Amendments of 1983
(P.L.
98-21)
provided for the establishment of a prospective
payment
system
(PPS) for
inpatier't hospital services baseC on diagnosis related
groups
(DRGs).
The
legislation also required the Secretary to report to Congress in 1985 on the
advisability and feasibility of paying for physician
services provided
to
hospital inpatients on the basis of a DRG-type
classification
system.
The
report was due July 1 , 1985, but had not been forwarded to the Congress as of
Feb. 20, 1987.
It is expected that a physician DRG payment scheme for inpatient services
would involve the establishment of a predetermined rate for each of the 468
DRGs used under the P P S system.
The rate could be based on the average of
allowable charges per admission during a base year.
Rates which appeared
services.
Census
out-of-line might be repriced, vis-a-vis rates for other
division and urban/rural variations comparable to those under P P S might be
included.
A physician DRG payment unit is generally thought of a s starting with
the
hospital admission and ending with the hospital discharge.
It would thus be
consistent with the P P S unit of service which is the hospital episode.
In
certain cases, e.g., certain surgical DRGs, the pricing
package might be
defined to include certain preadmission and/or
post discharge servites or
time periods of services.
This would counter incentives to unbundle some
services.
However, for many DRGs, particularly nonsurgical DRGs, it would be
difficult to define what preadmission and/or
post discharge t.ime period
should be
considered part of the inpatient episode for reimbursement
purposes.
There is concern that the existing DRG classification
system which was
designed to reflect hospital costs may
not in all cases fully reflect
differences in physician input costs.
A recent study
("Creating DRG-Based
Physician Reimbursement Schemes," by Janet Mitchell, Oct. 1984)
showed that
while there is relatively little variation i n doctors' approved
charges for
cases within specific surgical DRG categories, there were wide variations
in
doctorsf approved charges for cases within medical DRG categories.
Making
p a y m e n t s o n t h e b a s i s o f physician D R G s could t h u s i n v o l v e l a r g e n u m b e r s o f
" w i n n e r s " and " l o s e r s " f o r medical DRGs.
S o m e of
these individual effects
could be p a r t i a l l y o f f s e t depending o n h o w t h e p a y m e n t s a r e made.
DRG payment
system for
O n e of t h e k e y i s s u e s i n d e s i g n i n g a physician
i n p a t i e n t s e r v i c e s i s determining t o whom
the payment
should actually be
made.
P a y m e n t s c o u l d b e m a d e to t h e a t t e n d i n g p h y s i c i a n , t h e m e d i c a l
staff
One consideration in making
this
o f t h e h o s p i t a l o r t h e hospital itself.
c h o i c e i s t h e d e g r e e of f i n a n c i a l r i s k t h a t i s i m p o s e d o n t h e v a r i o u s parties
involved.
F o r e x a m p l e , a n i n d i v i d u a l p h y s i c i a n ' s c a s e l o a d may c o n s i s t o f a
higher proportion o f sicker patients r e q u i r i n g m o r e i n t e n s i v e c a r e t h a n t h e
a v e r a g e f o r a p a r t i c u l a r DRG.
P l a c i n g a n i n d i v i d u a l physician a t r i s k could
potentially
e n c o u r a g e t h e provision
of less care than was
medically
a p p r o p r i a t e o r t h e a v o i d a n c e of m o r e s e v e r e cases.
Further, this approach
would i m p o s e a d d i t i o n a l a d m i n i s t r a t i v e burdens
o n physicians.
Attending
physicians w o u l d b e r e s p o n s i b l e f o r o b t a i n i n g r e q u i s i t e s e r v i c e s f r o m o t h e r
p h y s i c i a n s a n d p a y i n g them f o r s e r v i c e s rendered.
P r o b l e m s could a r i s e i f
p h y s i c i a n s could n o t a g r e e o n h o w t o s u b d i v i d e t h e s i n g l e payment.
A l t e r n a t i v e l y , physician DRG payments could b e m a d e to t h e m e d i c a l
staff
of t h e hospital
w h i c h would
then be
responsible for distributing
the
payments.
T h e d i s t r i b u t i o n of payments a m o n g i n d i v i d u a l p h y s i c i a n s c o u l d be
based o n their p e r c e n t a g e of total billings.
If t o t a l b i l l i n g s exceeded
DRG
payment a m o u n t s , e a c h staff member would r e c e i v e p r o p o r t i o n a t l e y l e s s w h i l e
if total billings w e r e l e s s than p a y m e n t s , each staff member
would
receive
T h ~ s ,the physicians c o l l e c t i v e l y would be a t r i s k for
proportionately more.
by
i n d i v i d u a l members.
either e x c e s s i v e utilization or e x c e s s i v e billings
T h i s a p p r o a c h , w h i l e placing a d d i t i o n a l burdens o n h o s p i t a l s t a f f s , h a s t h e
potential a d v a n t a g e of creating a r i s k pool of
s u f f i c i e n t s i z e tc a v o i d
unacceptable r i s k s a s s o c i a t e d with i n c r e a s e s i n c a s e s e v e r i t y (i.e., i n c r e a s e
I n the percentage of sicker p a t i e n t s r e q u i r i n g m o r e c a r e t h a n a v e r a g e
for a
particular DRG) .
Another a p p r o a c h would be to pay t h e h o s p i t a l directly which would i n turn
d i s t r i b u t e t h e funds.
P a y m e n t s could be made either a s a s e p a r a t e p h y s i c i a n
D R G payment or a c o m b i n e a a m o u n t f o r both physicians' a n d h o s p i t a l
services
rendered during t h e i n p a t i e n t stay.
This approach places
strong incentives
on t h e hospital t o c o n t a i n expenditures.
H o w e v e r , t h i s a p p r o a c h would
place
t h e i n s t i t u t i o n i n t h e position
of a r b i t r a t i n g payment
disputes among
physicians a n d , i n t h e c a s e o f c o m b i n e d p a y m e n t s , a m o n g p h y s i c i a n s a n d o t h e r
c o m p e t i n g interests.
A physician D R G payment s c h e m e would g i v e p h y s i c i a n s (or physician groups)
t h e i n c e n t i v e t o p r a c t i c e m o r e e f f i c i e n t l y s i n c e they w o u l d b e a t risk f o r
a n y c o s t s i n e x c e s s o f t h e p a c k a g e price.
T h i s payment
approach would
directly a d d r e s s t h e problem of u n b u n d l i n g f o r s e r v i c e s provided
in the
i n p a t i e n t setting.
I t would a l s o a d d r e s s t h e d i v e r g e n c e of
economic
i n c e n t i v e s t h a t c u r r e n t l y exist between h o s p i t a l s a n d physicians.
Under PPS,
h o s p i t a l s h a v e t h e i n c e n t i v e to h o s p i t a l i z e patients f o r a s s h o r t a period a s
Conversely,
needed a n d t o p e r f o r m a minimum n u m b e r o f t e s t s a n d treatments.
physicians h a v e t h e i n c e n t i v e to k e e p patients i n t h e h o s p i t a l l o n g e r a n d t o
perform a d d i t i o n a l b i l l a b l e procedures.
Implementation of a physician DRG
system would a l i g n t h e incentives.
H o w e v e r , t h e c o n c e r n h a s been
expressed
t h a t i f hospital a n d physician i n c e n t i v e s a r e t o o c l o s e l y a l i g n e d t h e quality
of patient c a r e may b e affected. T h e physician may n o l o n g e r be a s s t r o n g a n
a d v o c a t e f o r needed m e d i c a l services.
P a t i e n t a c c e s s t o c a r e may b e a f f e c t e d
if h o s p i t a l s p r a c t i c e "skimming," i.e., a d m i t t i n g l a r g e n u m b e r s o f p a t i e n t s
w h o r e q u i r e l e s s c a r e than a v e r a g e f o r t h e D R G w h i l e r e f e r r i n g . e l s e w h e r e
-
patients who require more care than average.
While a physician DRG payment approach would
limit expenditures for
individual admissions it might not be as effective in controlling overall
expenditures.
For example, certain complex cases might be managed
in two
admissions instead of one.
It is also likely that many
services would
be
transferred to outpatient settings and billed for separately.
The DRG payment limitations would not apply to services provided
in
roughly 35-40% of total physician
expenditures.
At
outpatient setting
this point, i t is generally agreed that the capability does not exist to
extend the approach beyond the hospital setting. DRGs for inpatients have
been defined in terms of specific diagnoses which
require comparable
resources and are delimited
by
the hospital episode itself.
However,
identification of payment units for purposes of outpatient services is more
difficult.
--
A number of persons have suggested that a DRG payment approach may not be
appropriate for all physician
services provided
on a n inpatient basis.
However, a number have suggested
this approach might be appropriate for
by
hospital-based physicians,
generally
payment for services provided
P.L.
radiologists, anethesiologists, and pa-thologists (the so-called RAPS).
99-509 requires the Department to study this issue.
The President's F Y E 7
Budget includes a RAP proposal
(see discussion, Part IV A, above);
the
specifics of this proposal are not currently available.
Capitation
A third reform option is that of capitation. Medicare currentiy pays some
~ r o v i d e r s (i.e., risk contracting HMOs and competitive medical plans) on this
basis.
It is expected that the number of beneficiaries who are coverea under
these arrangements will grow substantially over the nsxt few years.
The
Administration favors extension of this approach to additional beneficiaries.
Under an alternative capitation approach known as geographic
capitation,
servs
Medicare would contract with an entity, such as a Carrier, which would
as a n at-risk
insurer in a defined
geographic area.
Medicare wouid
essentially purchase a specified package of services (physician services, all
person
Part B services, or Part A and Part B services) for a specified per
price.
The entity would be responsible for determining payment amounts and
payment units.
To assure beneficiary access to care at predictable levels of
out-of-pocket
costs, an entity
could be required to obtain physician
participation agreements from a certain percentage of physicians
in the
geographic area.
Certain financial incentives might be
employed
(such as
reduced
cost-sharing)
to encourage beneficiary
use
of
participating
physicians.
The Federal Government would be required to determine the per
person
payment amount.
Medicare uses 95% of the Average Adjusted
Per Capita Cost
organizations
(AAPCC) calculation for paying at-risk health
maintenance
(HMOs) and competitive medical Flans (CMPs).
The AAPCC is a n estimate of the
average per person cost of Medicare benefits in the area.
A
similar
calculation could be made for a n area-wide capitation system.
However, many
persons
feel that the AAPCC
calculation does not adequately
reflect
variations in the health
status of enrolled population
resulting from
A
capitation amount would
be
selective
i . .
voluntary)
enrollment.
relatively easy
to calculate if the system were mandatory
for
all
beneficiaries.
H o w e v e r , a mandatory approach i s probably
not feasible a t
t h i s time.
T h e r e i s relatively l i t t l e e x p e r i e n c e w i t h
t h e c o n c e p t of
g e o g r a p h i c c a p i t a t i o n systems.
S e v e r a l h a v e suggested t h e possibility
of a
d e m o n s t r a t i o n project i n t h i s area.
D. Assignment/Participation
Issues
R e g a r d l e s s of t h e reform o p t i o n c h o s e n , a d e c i s i o n would n e e d t o be m a d e
a b o u t w h e t h e r p h y s i c i a n s would be required t o a c c e p t Medicare's p a y m e n t r a t e
a s t h e f u l l payment (plus a n y required coinsurance) o r i f p h y s i c i a n s would be
permitted to c h a r g e a d d i t i o n a l amounts.
The questicn is whether assignment
s h o u l d b e mandatory o r optional.
T h e i s s u e o f mandatory
versus voluntary
a s s i g n m e n t h a s been t h e f o c u s o f d e b a t e f o r several years.
The American
Medical Association (AMA) i s strongly o p p o s e d t o mandatory a s s i g n m e n t w h i l e a
n u m b e r of beneficiary g r o u p s h a v e indicated their support.
P r o p o n e n t s of mandatory a s s i g n m e n t n o t e t h a t under
the current system,
many patients h a v e d i f f i c u l t y u n d e r s t a n d i n g h o w Medicare d e t e r m i n e s payment.
cases
A n a m b e r of b e n e f i c i a r i e s h a v e been f a c e d w i t h high a n d i n many
unanticipated out-of-pocket c o s t s in c o n n e c t i o n with
their d o c t o r s ' bills.
In F Y 8 5 , b e n e f i c i a r i e s effectively faced a c o i n s u r a n c e of 45.9% o n unassigned
c l a i m s ; they w e r e f i n a n c i a l l y r e s p o n s i b l e f o r t h e 25.9%
average reduction
It
from billed c h a r g e s i n a d C i t i o n t o the 20% statutory c o i n s u r a n c e amount.
may S e C i f f i c u i t f o r beneficiaries
to budget
for the reduction amounts
a s s o c i a t e d with unassigned claims.
F r e q u e n t l y , these arnocnts a r e not c o v e r e d
u n d e r health
i n s u r a n c e p o l i c i e s s u p p l e m e n t a l to
Medicare
("Medi-Gap"
policies).
T h e D e f i c i t R e d u c t i o n Act
of
1984 addressed
s o m e of
these
c o n c e r n s by p r o h i b i t i n g nonparticipating physicians from r a i s i n g their billed
c y a r g e s during t h e 15-monch f r e e z e period.
T h e s e proviSiO?S
were
excende5
through Dec. 3 1 , 1986. Beginning Jan. 1 , 1 9 8 7 when t h e f r e e z e i s r e n o v e d ,
nonparticipating physicians will f a c e a l i m i t o n the a l l o w a b l e
i n c r e a s e s in
their charges.
P r o p o n e n t s of mandatory a s s i g n m e n t a l s o s u g g e s t that t h e e x i s t i n g proSlems
will be exacerbated a s Medicare places a d d i t i o n a l l i m i t s o n a p p r o v e d charges.
T h e y s u g g e s t tP.at physicians may be l e s s likely to a c c e p t a s s i g n n e n t and t 2 a t
a n y Medicare cost-savings will be transferred to b e n e f i c i a r i e s in t h e form of
increased out-of-pocket c o s t s f o r unassigned claims.
Thus any incentives for
e f f i c i e n c y which a r e incorporated in a n e w payment system c o u l d be l a r g e i y
o f f s e t u n l e s s a s s i g n m e n t w e r e mandated.
They further suggest that mandatory
a s s i g n m e n t would be particularly i m p o r t a n t under a physician
D R G payment
scheme.
O t h e r w i s e , physicians could a c c e p t a s s i g n m e n t f o r c a s e s whose
costs
w e r e l e s s than t h e D R G r a t e and n o t a c c e p t a s s i g n m e n t a n d b i l l t h e p a t i e n t
t h e a d d i t i o n a l a m o u n t when t h e c o s t s w e r e more.
Mandatory a s s i g n m e n t w o u l d , i n e f f e c t , l i m i t o v e r a l l p a y m e n t s f o r c o v e r e d
s e r v i c e s provided t o enrollees.
O p p o n e n t s of
this a p p r o a c h contend
that
mandatory a s s i g n m e n t would r e p r e s e n t a n unwarranted
infringement into the
p r i v a t e p r a c t i c e of medicine.
I t would
i n t e r f e r e with
the
existing
doctor-patient r e l a t i o n s h i p by preventing
physicians
from f r e e l y entering
A d v o c a t e s of t h e v o l u n t a r y a s s i g n m e n t
i n t o " c o n t r a c t s w w i t h their patients.
a p p r o a c h s t a t e t h a t s i n c e physicians c u r r e n t l y h a v e t h e o p t i o n of a c c e p t i n g
o r r e j e c t i n g a s s i g n m e n t , Medicare b e n e f i c i a r i e s a r e a b l e t o select f r o m
v i r t u a l l y t h e e n t i r e physician population.
T h e y a r g u e t h a t if a s s i g n e m n t
w e r e m a n d a t e d , a n u m b e r of physicians might
d r o p o u t of
t h e program.
B e n e f i c i a r y a c c e s s i n certain g e o g r a p h i c a r e a s and/or
t o c e r t a i n physician
s p e c i a l i t i e s would t h e r e f o r e b e jeopardized.
Patients who have established a
long-standing relationship with particular physicians might be forced to seek
care elsewhere if they wished to receive program
payments for services.
Advocates of mandatory asssignment have countered this argument by
stating
that the developing oversupply of physicians coupled with the importance of
Medicare in many physicians' practices make a
significant access problem
unlikely in most areas.
Opponents of mandatory assignment indicate that physicians as a group have
been responsive to the financial concerns of their patients.
They
suggest
that physicians are more willing t o accept assignment in cases of financial
hardship.
They note that physicians are more likely to accept assignment a s
annual charges increase and as beneficiaries get older.
They also note that
the majority of beneficiaries have relatively modest annual 1.iability in
connection with physicians' claims.
The law includes several incentives for physicians to become participating
A number of persons have suggested that
i n lieu of mandating
physicians.
assignment attention should be focused o n creating additional incentives for
physicians
to participate.
For example, Medicare
could pay a higher
percentage
i
t above 80%) of the approved
rates for participating
physicians and a reduced percentage (i.e., below 80%) for nonparticipating
physicians.
Patients would
then have strong incentives for selecting
participating physicians.
A number . o f entities, both
governmental and private, are currently
studying various aspects of physician reimbursement under Medicare.
The 97th Congress required the Department to prepare
the following
studies which were due in 1985, but which had not been submitted by Nov.
1986.
--
Physician DRG Study. P.L. 98-21, the Social
Security Amendments of 1 9 8 3 , established the
prospective payment system for hospitals based
on DRGs.
This legislation also required the
Secretary to begin during F Y 8 4 the collection
of data necessary to compute the amount of
physician charges for services furnished to
hospital inpatients for each DRG.
The law
required the Secretary to report to Congress
i n 1985 on the advisability and feasibility of
paying for inpatient physician services o n the
basis of DRGs.
DEFRA specified that the
due date was July 1 , 1985.
--
Study of Chanqe in Volume and Mix of Services.
DEFRA required the Secretary to monitor
physician services to determine any change
during the 15-month fee freeze in the per capita
volume and mix of services provided to enrollees.
The Secretary is required to report to the Congress
by July 1985 on any changes that have occurred.
The report is to include legislative recommendations
for assuring that any restrictions in the growth of
two
20,
P a r t B c o s t s which C o n g r e s s i n t e n d s to be borne by
p r o v i d e r s a n d physicians i s n o t t r a n s f e r r e d to
b e n e f i c i a r i e s i n t h e form of i n c r e a s e d out-of-pocket
c o s t s , r e d u c e d services o r r e d u c e d a c c e s s t o n e e d e d
physicians' care.
s t u d i e s o n a broad
range of
T h e D e p a r t m e n t i s conducting a s e r i e s of
p h y s i c i a n r e i m b u r s e m e n t i s s u e s both i n c o n n e c t i o n with
the congressionally
m a n d a t e d r e p o r t s a s w e l l a s i t s o n g o i n g i n t e r e s t i n t h e s e issues.
The
f i n d i n g s from a n u m b e r o f t h e s t u d i e s a r e e x p e c t e d t o be r e f l e c t e d i n t h e
reports.
D E F R A a l s o r e q u i r e d t h e O f f i c e of T e c h n o l o g y Assessment (OTA) t o r e p o r t t o
C o n g r e s s by Dec. 3 1 , 1 9 8 5 , on f i n d i n g s a n d r e c o m m e n d a t i o n s w i t h
respect t o
w h i c h P a r t B p a y m e n t a m o u n t s a n d policies may b e modified to:
--
--
e l i m i n a t e i n e q u i t i e s i n t h e r e l a t i v e a m o u n t s paid
t o p h y s i c i a n s by t y p e of s e r v i c e , l o c a l i t y and
s p e c i a l t y with a t t e n t i o n to a n y i n e q u i t i e s between
c o g n i t i v e services and medical procedures; and
i n c r e a s e i n c e n t i v e s f o r physicians a n d s u p p l i e r s
to a c c e p t assignment.
T h e OTA r e p o r t , which
was
submitted i n F e b r u a r y 1 9 8 6 , e x a m i n e d f o u r
a l t e r n a t i v e Medicare payment polices:
modifications to the current payment
s y s t e m , f e e s c h e d u l e s , paying for packages of s e r v i c e s , a n d capitation.
The
r e p o r t noted t h a t t h e effects of each
strategy a r e d i f f i c u l t to p r e d i c t ,
because of t h e u n c e r t a i n t y regarding physicians' behavior a n d
the changing
medical marketp,lace. T h e report suggests t h a t t h e policy
options that
i n v o l v e the l e a s t a m o u n t of c h a n g e from t h e c u r r e n t payment
methodology
or
t h a t c a l l f o r r e s e a r c h and demonstration could be i m p l e m e n t e d w i t h i n 1 t o 2
years.
T h e s e policy o p t i o n s include:
reducing t h e number of payment
codes,
i n s t i t u t i n g v o l u m e c o n t r o l s , and mandating assignment.
F e e s c h e d u l e s based
o n historical c h a r g e d a t a could a l s o be i m p l e m e n t e d i n t h e n e a r future.
H o w e v e r , other t y p e s of reforms, such a s universal c a p i t a t i o n , r e s o u r c e b a s e d
r e l a t i v e values s c a l e s , and payments for s o m e t y p e s of p a c k a g e s o r b u n d l e s o f
services
(such a s physician DRGs) may
require further
research
and
d e m o n s t r a t i o n before they could b e implemented.
COBRA required t h e S e c r e t a r y , with t h e a d v i c e o f t h e n e w l y e s t a b l i s h e d
scale
(RVS) f o r
P h y s i c i a n P a y m e n t C o m m i s s i o n , to d e v e l o p a r e l a t i v e v a l u e
to
physician payments. P.L. 99-509 d e f e r s t h e d a t e t h e S e c r e t a r y i s r e q u i r e d
r e p o r t o n t h e R V S t o J u l y 1 , 1989. T h e potential a p p l i c a t i o n d a t e o f t h e R V S
i s deferred u n t i l a f t e r Dec. 3 1 , 1989.
P.L. 9 9 - 5 0 9 a l s o r e q u i r e d the S e c r e t a r y to study and r e p o r t to C o n g r e s s by
July 31, 1987 concerning the design and implementation of a prospective
payment system f o r payment under P a r t B f o r r a d i o l o g y , a n e s t h e s i o l o g y , a n d
pathology (RAP) s e r v i c e s f u r n i s h e d to h o s p i t a l inpatients.
T h e report i s to
i n c l u d e d a t a from a r e p r e s e n t a t i v e s a m p l e s h o w i n g , f o r d i s c h a r g e s
classified
w i t h i n each diagnosis-related
group
(DRG),
the distribution of
total
r e a s o n a b l e c h a r g e s a n d c o s t s for each i n p a t i e n t discharge.
-
LEGISLATION
H.Con.Res.
3 0 (Kolter et al.)/s.Con.Res.
1 5 (Heflin, et al.)
Expresses
sense of Congress that no major change i n the
payment
methodology
for physicians'
services, including services
to
hospital
inpatients, should have been made until reports required by 99th Congress are
received and evaluated.
H.Con.Res. 30 introduced in House on Jan. 22, 1987.
S.Con.Res. 1 5 introduced in Senate on Feb. 5 , 1987.
S.COn.Res.
5 6 (Durenberger, et al.)
Exp.resses sense of Congress that . n o significant changes in payment
methodology
for physicians'
services, including services
to
hospital
inpatients should be undertaken until results of reports required by
99th
Congress are received and analyzed and Congress has considered advantages and
disadvantages of possible solutions.
Introduced.
Introduced May
1 , 1987;
referred to Committee on Finance.
HEARINGS
U.S.
Congress.
House.
Committee on Energy and Commerce.
Subcommittee on Health and the Environment.
Physician
payments under Medicare.
Hearings, 99th Congress.
1st session. Apr. 26, 1985.
[unpublished]
U.S.
Congress. House.
Committee on Ways and Means.
Medicare reimbursement for physician services.
Hearings, 99th Congress, 2d session. Apr. 14, 1986.
U.S.
Congress.
Senate.
Committee on Finance.
Medicare's physician payment system.
Hearings,
99th Congress, 2d session. Apr. 2 5 , 1986.
-----
Reform of Medicare payments to physicians.
99th Congress, 1st session. Dec. 6, 1986.
U.S.
Congress.
Senate.
Special Committee on Aging.
Medicare:
Physician payment options.
Hearings, 98th
Congress, 2d session. Har. 1 6 , 1984.
Washington,
U.S. Govt. Print. Off., 1984.
Hearings,
REPORTS AND CONGRESSIONAL DOCUMENTS
The Consolidated Omnibus Budget Reconciliation Act
of 1985.
Congressional record, Apr. 8 , 1986:
Contains text of P.L. 99-272.
U.S.
S3799-S3891.
Congress.
Conference Committees, 1985.
Consolidated
Omnibus Budget Reconciliation Act of 1985; conference report
to accompany H.B. 3128.
Dec. 1 9 , 1985. Washington, U.S.
Govt. Print. off., 1985.
(99th Congress, 1st session.
House.
Report no. 99-453)
Also a p p e a r s i n P a r t I11 of t h e C o n g r e s s i o n a l R e c o r d ,
Dec. 1 9 , 1 9 8 5 ( v . 1 3 1 , no. 177)
U.S.
Congress.
C o n f e r e n c e C o m m i t t e e s , 1986. P r o v i d i n g f o r
r e c o n c i l i a t i o n pursuant to S e c t i o n 2 o f t h e C o n c u r r e n t R e s o l u t i o n
o n t h e B u d g e t f o r F Y 8 7 ; c o n f e r e n c e r e p o r t to a c c o m p a n y H.R. 5300.
Oct. 7 , 1986. W a s h i n g t o n , U.S. Govt. Print. Off., 1986.
(99th C o n g r e s s , 2d session.
House.
R e p o r t no. 99-1012)
U.S.
Congress.
House.
C o m m i t t e e o n t h e Budget.
Reconciliation Act
o f 1 9 8 6 ; r e p o r t to a c c o m p a n y H.R. 5300.
J u l y 3 1 , 1986.
W a s h i n g t o n , U.S. Govt. Print. Off., 1986.
(99th C o n g r e s s ,
2 d session.
House.
R e p o r t no. 99-727)
U.S.
Congress.
House.
Committee. o n W a y s a n d Means.
S u b c o m m i t t e e o n Health.
Proceedings of the conference
Feb..l, 1984. W a s h i n g t o n ,
o n t h e f u t u r e o f Medicare.
U.S. Covt. Print. Off., 1984. 3 6 2 p.
At head o f title:
9 8 t h C o n g r e s s , 2d session.
House.
C o m m i t t e e p r i n t 98-23.
U.S.
Congress.
Senate.
C o m m i t t e e o n t h e BuBget.
Sixth Omnibus
R e c o n c i l i a t i o n Act of 1 9 8 6 ; r e p o r t to a c c o m p a n y S. 2706.
J u l y 3 9 , 1986. Washington, U.S. Govt. Print. Off., 1986.
(99th C o n g r e s s , 2d session.
Senate.
R e p o r t no. 99-348)
House.
R e p o r t no: 99-453)
U.S.
Congress.
Secate.
C o m m i t t e e o n Finance./
House.
C o m m i t t e e s o n W a y s and Means and o n Energy a n d Commerce.
J o i n t c o m m i t t e e print.
Background d a t a o n ~ h y s i c i a n
r e i m b u r s e m e n t under Medicare.
October 1983. Washington.
U.S. Govt. Print. Off., 1983.
1 0 9 p.
At head of title:
9 8 t h C o n g r e s s , ' 2 6 session.
Senate
J o i n t c o m m i t t e e print 98-106.
U.S.
Congress.
Senate.
Special C o m m i t t e e on Aging.
Medicare:
paying t h e physician -- h i s t o r y , i s s u e s , and opticns.
I n f o r m a t i o n paper.
March 1984.
W a s h i n g t o n , U.S. Govt.
Print. Off., 1984.
3 7 p.
At head o f title:
9 5 t h C o n g r e s s , 2d session. Senate.
C o m m i t t e e print 98-153.
CHRONOLOGY OF E V E N T S
01/05/87
--
10/21/86
--
04/07/86
--
07/18/84
--
04/20/83
--
P r e s i d e n t submitted F Y 8 8 Budget.
P r e s i d e n t signed i n t o l a w (P.L. 99-509) t h e O m n i b u s
B u d g e t R e c o n c i l i a t i o n A c t of 1986.
P r e s i d e n t signed i n t o l a w (P.L. 99-272) t h e C o n s o l i d a t e d
O m n i b u s B u d g e t R e c o n c i l i a t i o n A c t of 1 9 8 5 (COBRA).
P r e s i d e n t signed i n t o l a w (F.L.
R e d u c t i o n Act of 1984.
98-369) t h e D e f i c i t
P r e s i d e n t signed i n t o l a w (P.L.
98-21) t h e S o c i a l
Security Amendments of 1983.
ADDITIONAL R E F E R E N C E S O U R C E S
B u r n e y , I r a , and G e o r g e Sheiber.
Medicare physician services:
t h e composition o f spending a n d a s s i g n m e n t rates.
Health
c a r e f i n a n c i n g review, f a l l 1985.
v. 7 , no. 1: 81-96.
Medicare physician payment, participation a n d
B u r n e y , I r a , e t al.
reform.
Health a f f a i r s , w i n t e r 1 9 8 4 , v. 3 , no. 4: 5-24.
H a d l e y , J a c k , e t al.
F i n a l r e p o r t o n a l t e r n a t i v e m e t h o d s of
developing a relative v a l u e s c a l e of physician services:
T h e Urban Institute, Washington, D.C.
R e p o r t pursuant t o
HCFA c o n t r a c t no. 500-81-0053.
October 1984.
1 3 9 p.
Toward developing a r e l a t i v e
H s a o , William, and William Stason.
v a l u e scale f o r medical and surgical services.
Health
care financing review, f a l l 1 9 7 9 , v. 1 , no. 2:
3-22.
J e n c k s , S t e p h e n , and Allen Dobson.
Strategies f o r reforming
Medicare's physician payments:
physician d i a g n o s i s related
groups and other approaches.
New England J o u r n a l of
Medicine, J u n e 6 , 1 9 8 5 , v. 3 1 2 , no. 23:
1492-1499.
Mitchell, Janet B., et al. Alternative methods of describing
physician services performed and billed.
Health Economics
Research, Inc., Chestnut H i l l , Massa-chusetts. R e p o r t
pursuant to HCFA grant no. 500-81-0054.
May 1 , 1984.
2 9 6 p.
Mitchell, J a n e t B., et al. Creating DRG-based physician
reimbursement schemes:
A conceptual and empirical
analysis. Center for Health Economics Research, B o s t o n ,
Massachusetts.
Year 1 R e p o r t pursuant to HCFA grant no.
18-P-983871-01.
October 1984.
R i c e , Thomas.
Determinants of physician assignment r a t e s by
type of service.
Health c a r e financing r e v i e w , s u m m e r
1 9 4 8 , v. 5 no. 4, 33-42.
U.S.
Congress.
Office of Technology Assessment.
Payment
f o r physician services:
strategies f o r Medicare.
[ w a s h i n g t o n ] February 1986.
(OTA-H-294)
U.S.
Congressional Budget Office.
Physician r e i m b u r s e m e n t under
Medicare:
o p t i o n s f o r change.
[Washington] April 1986.
U.S.
Dept. of Health and Human S e r v i c e s , HCFA.
Physician
reimbursement and participation in Medicare, unpublished
paper.
Sept. 2 0 , 1984.
U.S.
General Accounting Office.
Reimbursing physicians
under Medicare on the basis of their specialty.
Letter
Report t o HCFA (GAO/HRD84-94) Sept. 2 7 , 1984.
1 0 p.
U.S.
Library of Cqngress.
C o n g r e s s i o n a l Research Service.
Medicare:
F Y 8 8 budget [by] J e n n i f e r O'Sullivan.
(Updated regularly)
[ w a s h i n g t o n ] 1985.
CRS I s s u e Brief 8 7 0 3 8
CRS I s s u e Brief 8 6 0 4 5