The federal government unveiled a national fee schedule Friday for doctors who treat the nation's 33-million Medicare beneficiaries. It offers major increases for office visits and consultations with patients but sharp reductions in payments for surgery. The fee plan would replace a complex system of variable reimbursements with a uniform set of charges determined by the federal government. By affecting one of the biggest single sources of physician revenue, it could lead to dramatic changes in the way medicine is practiced in the United States.
The new system will greatly increase payments to general practitioners at the expense of such specialists as anesthesiologists and surgeons who perform coronary bypass operations and cataract removals. It will benefit physicians practicing in rural areas while reducing reimbursements to doctors in high-cost cities and states.
The shift is "the most significant change since Medicare's inception in 1965," Gail Wilensky, head of the Health Care Financing Administration, said at a news conference. The plan, which covers charges for more than 4,000 procedures, will be open for public comment until Aug. 5. A final version will be published in October.
Unlike most bureaucracy reform programs, the fee plan is not designed to save money. Rather, it is intended to change the type of care Medicare patients receive, encouraging consultation and preventive advice and discouraging expensive surgery that may not be necessary. Since there will be less variation based on a physician's geographic location or past billing practices _ big factors in current reimbursement schedule _ patients will be able to easily determine in advance how much treatments will cost them.
The new system would begin to take effect on Jan. 1, 1992, when all fees currently within 15 percent of the new standards would be moved up or down to match the national figures. Those fees varying more than 15 percent would be adjusted to the Medicare scale over the next four years.
Instead of reducing overall outlays for physicians, which are expected to rise to $50-billion by 1996 from the current $32-billion, the new system will shift money around among different members of the medical profession.
For example, the reimbursement for a typical office visit, now billed at $38, will rise to $45 next year. But Medicare's reimbursement for hip joint replacement would drop from $2,111 to $1,888. Payment for a coronary artery bypass operation would fall from $3,181 to $2,892, and the price of a total hysterectomy would decline from $983 to $878, according to figures issued by the Health Care Financing Administration, which operates Medicare.
When Congress passed legislation in 1989 ordering development of the fee schedule, legislators were convinced the government was paying too much for procedures, such as surgery and radiology, and too little for office visits and consultations. Lawmakers also thought rural doctors were getting too little, while physicians in the cities charged too much.
By 1996, when the fee schedule is fully implemented, general practitioners will get 16 percent more than they receive under the current system, according to government estimates. Physicians classified as family doctors will receive 17 percent more. Optometrists and podiatrists also will enjoy substantial gains.
The big losers will include anesthesiologists, who now bill hospitals on a hourly basis for their services. These specialists will receive a fee fixed by the government, and their payments are expected to plunge by 16 percent as compared with the current system. Radiologists will face a 14 percent reduction in payments, and general surgeons a 9 percent drop.
As a result of these shifts, the new fee schedule is expected to move more medical students toward general and family practice, and away from specialties _ especially if the fee schedule is copied by private insurance companies. The government currently provides about a third of all money earned by doctors in the United States.
New fee schedule
Health officials announced a new schedule of fees Friday under which doctors will be reimbursed for services performed for Medicare patients. The schedule gives a bigger share to family doctors and general practitioners but less to surgeons and other specialists. Here are some examples of the fees doctors will be paid: (The program will be fully implemented by 1996; all figures are adjusted for inflation.)
Medical service Medicare- '92 fee '96 fee
Office visit $38 $45 $48
Coronary bypass $3,181 $2,892 $1,925
Hip replacement $2,111 $1,888 $1,486