GAO report on physician payments could prolong controversy

A government report scheduled for release this month is expected to give Congress some direction on whether a controversial Medicare physician payment policy has any hope of implementation.

The payment policy affects the physician practice expense portion of the Medicare Resource-based Relative Value Scale (RBRVS), which is the basis on which the government has paid most physicians under Medicare since the early 1990s. Emergency physicians aren't likely to be greatly affected by the proposed changes. But hospitals could see large reductions for the technical components of ED and other outpatient services.

The Government Accounting Office (GAO) in Washington, DC is scheduled to release the report this month. Its purpose is to evaluate the proposed changes to the RBRVS, which could help Congress determine whether to proceed with the original set of revisions or scrap it for something else.

Last year, the Health Care Financing Administration (HCFA) in Baltimore, MD, came up with the plan, which essentially involves revising the relative value units (RVUs) that pertain to the practice expenses in ways that more accurately reflect resource consumption by physicians. The goal was to end what the agency perceived to be payment disparities between office-based and hospital-bound physicians.

The revisions would have the overall effect of increasing payments to primary care physicians at the expense of reducing reimbursements to several medical specialties, including gastroenterology and emergency medicine.

The rules were slated to become effective this month. But provisions passed in the federal Balanced Budget Act of 1997 postponed their phased-in implementation until January 1999. The law also called for the GAO to review and evaluate the proposal.

In revising the present system, HCFA stated that it was trying to eliminate cases in which Medicare is overpaying some providers for their practice expenses and underpaying others, especially when the agency is already covering these expenses through the hospital payment.

Under the plan, physicians who typically furnish certain procedures such as minor surgeries in an office-based setting will see higher payments for their technical expenses. The increases are expected to come from the amounts that typically go to hospitals for their overhead.

The redistribution was expected to save Medicare some $55 million in hospital payments if the plan had been implemented this year and would have been budget neutral in terms of overall physician expenditures.

Emergency physicians are expected to see only a 2% decline in the practice expense portion of their payments, according to HCFA projected estimates. This compares with a 9% drop for radiology and a 20% cut for gastroenterology. (For a additional specialities affected, see the chart.)

The practice expense rule raised a furor among physicians when it was first proposed last year. The controversy hasn't died down. "Everyone is sort of watching on the sidelines to see what the GAO report has to say. But it's still a fairly hot issue," says Kevin Hayes, a senior analyst with the Medicare Payment Advisory Commission, a Washington, DC health care think tank that studies Medicare spending initiatives.