If healthcare reform fails on Capitol Hill, 1995 Medicare fee increases for physicians are expected once again to be skewed in favor of surgery and away from primary-care and nonsurgical procedures.
Without a healthcare reform measure, the 1995 Medicare fee update is expected to be set by a default formula established by the 1989 Omnibus Budget Reconciliation Act, which created Medicare's physician payment schedule. Under the formula, effective Jan. 1, surgical fees would rise 13.2%, primary care 9.4% and other nonsurgical services 6.7%.
"Unless Congress acts, the default formula goes into effect," said Charles Huntington, director of the American Academy of Family Physicians' Washington office. "We're not aware anyone is going to act."
"The odds are we're not going to have any law that would alter the formula," said Lawrence Goldberg, a healthcare expert in the Washington office of Deloitte & Touche. "There's no vehicle."
The default formula for updating the fees is equal to the change in cost of operating a medical practice, increased or decreased for the amount by which Medicare physician expenditures grew slower or faster than specified targets.
The default formula would boost the conversion factors-the dollar figure by which a service's relative value is multiplied-to $39.799 for surgery, $36.887 for primary care and $35.110 for other nonsurgical services.
Such a fee increase would represent a significant shift in favor of surgery and away from primary-care and nonsurgical procedures in just two years.
When the Medicare resource-based relative value scale was created to pay physicians, it aimed to favor primary-care services as an incentive to provide such services. As recently as 1993, the conversion factors were all within $1 of one another.
"While I think physicians will be pleased with the absolute value of the update, the impact it will have on the relative payments...is clearly a step in the wrong direction," said Robert Doherty, vice president of governmental affairs and public policy for the American Society of Internal Medicine.
"You're undermining the basis of the relative value schedule," said Marie Michnich, senior associate vice president with the American College of Cardiology, which represents surgeons as well as physicians who perform nonsurgical and primary-care services.
Although passage of healthcare reform legislation seems increasingly unlikely, three of the four major bills would provide more generous primary-care fee updates compared with the other two categories.
The reform bill proposed by Senate Majority Leader George Mitchell (D-Maine) would cut primary-care fees 1% and all other fees 4%. Bipartisan bills in the House and Senate would use the default update for primary care-a 9.4% increase-and cut all others 3%, while the bill drafted by House Majority Leader Richard Gephardt (D-Mo.) would allow the default formula to take effect for all fees.
Mr. Doherty said the huge boosts in the surgical fees will illustrate to members of Congress the need for a permanent change in the method of calculating the spending targets that are the foundation of the default formula for fee increases.
Congress may consider caps on entitlements such as Medicare next year as part of a budget reconciliation bill, and Mr. Doherty said that may provide an opportunity to change the calculation methods.