November 28, 2012 / 8:25 PM / in 5 years

Cutting consultations led to more Medicare spending

NEW YORK (Reuters Health) - Medicare unintentionally spent more money on doctor‘s-office visits in 2010, the year it introduced a simplified fee schedule, according to a new study.

Researchers found that the U.S. government-run insurance for the elderly paid an average of $40 more per beneficiary after it stopped paying for consultations with specialists and increased its payments for regular doctors’ visits - even though the goal had been to break even while streamlining fee categories.

“It’s important to emphasize the increase is - as far as we know right now - just a onetime change… We don’t know if this change will last or if the growth rate will go back to what it was,” said the study’s lead author Zirui Song of Harvard Medical School in Boston.

Before the change, Medicare paid doctors about $125 for a consultation of “medium complexity,” about $92 for a standard first-time office visit and about $61 for seeing a regular patient.

Specialists, such as surgeons and obstetrician-gynecologists, typically billed for the more expensive consultations and family doctors, known as primary care physicians, billed for the cheaper office visits.

The income gap between specialists and family doctors is often cited as one reason that medical students choose not to go into primary care, which many fear will cause a doctor shortage within the next decade.

One study from 2010 found that family doctors earn as little as half what their colleagues who specialize in areas such as surgery and oncology take home. (see Reuters Health story of October 25, 2010 here:

By making both family doctors and specialists charge for office visits rather than consultations, the Centers for Medicare and Medicaid Services (CMS) may have leveled the playing field somewhat, but the agency intended the policy change to be “neutral” in cost terms.

To see if that was the result, Song and his collaborators, who include a chairman of the Medicare Payment Advisory Commission, analyzed 2.2 million Medicare patients’ claims made from 2007 through 2010.

The study used a Thomson Reuters database and one of the co-authors is a Thomson Reuters employee.

The researchers, who published their findings in the Archives of Internal Medicine, found that Medicare paid about $628 annually per patient from 2007 through 2009.

After the change in 2010, the program paid about $668 per patient - a 6.5 percent jump.

Most of the increase can be explained by Medicare’s higher payments for office visits, they conclude, but not all of it. Doctors also started charging Medicare for more “complex” office visits.

The characterization of a patient visit is somewhat subjective, the authors explain in their report. A simple visit might involve a 10-minute exam and “straightforward” attention to a specific problem, whereas a “high-complexity” visit might last 60 minutes, entailing exhaustive history taking, examination and “decision-making.”

“You might say just from a third-party perspective, simply changing the fee schedule should not have an effect on how sick a patient is… but physicians were coding at a higher level,” Song told Reuters Health.

As for specialists being paid more than family doctors, the researchers found the change did help to narrow the payment gap.

Of the 6.5 percent extra Medicare expenditure in 2010, about $6 of every $10 went to family doctors and the rest to specialists.

“It was a noble effort on the CMS’ part to try and change incentives to improve the payment disparity between primary care physicians and specialists,” said Dr. Patrick O‘Malley, an internist at the Uniformed Services University of the Health Sciences in Bethesda, Maryland.

But O‘Malley told Reuters Health that “meddling” with fees will not solve the broader problems facing primary care, including high expectations for family doctors, increasingly complex patients and the worsening doctor shortage.

In an editorial accompanying the study, O‘Malley says that doctors across specialties and organizations need to help fix these problems.

“It’s not only up to primary care providers alone to fix the primary care problem; it’s up to every physician to be responsible for helping to fix it,” he writes.

“I think it’s going to be a process of incremental change. I‘m hoping the Affordable Care Act will move us in the right direction, but I think we will also hit rock bottom, where we’ll see ourselves in a desperate state,” O‘Malley said.

SOURCE: and Archives of Internal Medicine, online November 26, 2012.

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