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Back To Vidyya Medicare Announces Fee Increase For Physicians

Payment Rates To Physicians Will Increase By 4.5 Percent Overall Next Year

Medicare payment rates to physicians will increase by 4.5 percent overall next year, the Health Care Financing Administration announced yesterday.

The figure is the net result of adjustments made under the law to a 5.1 percent update in the final physician fee schedule for calendar year 2001. Rate increases for specific services will vary because of the continuing implementation of a new payment system for physician practice expenses.

The final fee schedule rule is being published in the November 1, Federal Register. The physician fee schedule specifies physician payment rates for more than 7,000 services and procedures covered by Medicare, from routine office visits to cardiac bypass surgery. In 2001, Medicare will pay approximately $40 billion for physician services, up from $37 billion in 2000.

The new payment system for physician practice expenses, also required by law, is based on resources involved in providing care, rather than on physicians' historical charges. Resource-based values for the physicians' work were implemented several years ago, and we are currently implementing resource-based values for the expenses associated with physicians' practices. In this the third year of a four year phase-in of the new system, 75 percent of physician fees will be based on the new system and 25 percent will be based on physicians' historical charges. Payments for 2002 will be entirely based on the new system.

"We will continue working with physicians to refine our methodologies to enhance benefits for seniors and ensure that payments are as accurate as possible when they are completely based on the new, resource-based system," said HCFA Acting Administrator Michael Hash.

The change in payment rates between 2000 and 2001 is the result of the update, transition to the resource-based practice expense payment system, technical changes in the pricing for various services, as well as updated data on malpractice insurance premiums. Payment changes by physician specialty vary mostly as a result of the transition to resource-based practice expense payments. Thus, specialties whose historical charges for practice expenses were less than resource-based rates, primarily office-based physicians such as family practitioners and dermatologists, will have increases greater than 4.5 percent. Cardiac and thoracic surgeons whose historical charges were substantially higher than resource-based rates will experience a small decline in payments. A chart showing estimated aggregate payment changes by specialty is attached.

Input from physicians enabled HCFA to make several refinements in the final rule:

  • * Beneficiaries can obtain a 12 month, rather than 12 week, supply of antigens for allergies;
  • * Proposed changes for pacemaker and other cardiac device services were withdrawn; and
  • * The most recent malpractice insurance premium data are being used to calculate payment for malpractice costs.

In addition, for the first time in 2001, physicians will be able to receive separate payment for certifying and recertifying that patients are eligible for Medicare home health services. This change is being made to emphasize the importance of physician involvement in home health services under the new prospective payment system for home health services.


Combined Impact of Update, Practice Expense Transition, & All Other Factors:

  • Anesthesiology 2%
  • Cardiac Surgery -1%
  • Cardiology 1%
  • Chiropractor 3%
  • Clinics 3%
  • Dermatology 9%
  • Emergency Medicine 2%
  • Family Practice 6%
  • Gastroenterology 0%
  • General Practice 6%
  • General Surgery 2%
  • Hematology Oncology 6%
  • Internal Medicine 5%
  • Nephrology 4%
  • Neurology 4%
  • Neurosurgery 1%
  • Nonphysician Practitioner 5%
  • Obstetrics/Gynecology 6%
  • Ophthalmology 6%
  • Optometrist 12%
  • Orthopedic Surgery 4%
  • Other Physician 4%
  • Otolaryngology 7%
  • Pathology 2%
  • Plastic Surgery 6%
  • Podiatry 7%
  • Psychiatry 5%
  • Pulmonary 3%
  • Radiation Oncology 3%
  • Radiology 2%
  • Rheumatology 9%
  • Suppliers 5%
  • Thoracic Surgery -1%
  • Urology 6%
  • Vascular Surgery 1%

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Editor: Susan K. Boyer, RN
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