Under pressure from surgeons, Medicare reform proposals included in both congressional Republican and Clinton administration balanced-budget plans are likely to ease the transition to a unified physician fee payment base.
All the balanced-budget plans call for a single payment base to determine Medicare physician fees. Right now, separate "conversion factors" exist for primary care, surgery and all other services. To determine Medicare fees, the conversion factor is multiplied by a numerical value based on work and other resources used in serving a Medicare beneficiary in each procedure.
Congressional balanced-budget legislation called for a single 1996 conversion factor of $35.42, a 13.5% cut from the existing 1996 surgical conversion factor and a 0.4% cut for primary care, but a 1.9% increase for all other services. The plan sought $12.6 billion in physician-payment savings, about 6.2% of total Medicare savings of $202 billion between 1996 and 2002.
But President Clinton, while backing the single conversion factor of $35.42, also called for a transitional rate for surgeons of $38.10 in 1996, with a single updated conversion factor for all other physician services in 1997. His plan would save more than $15 billion over seven years in physician payments, out of total Medicare savings of $102 billion.
The administration proposal also would impose tighter expenditure growth caps during the seven years of the balanced-budget plan.
The Republicans' latest balanced-budget offer, proposed Jan. 5, also calls for a phase-in for surgeons to a single conversion factor, although specifics have not been released.
The phased-in conversion factor, along with several other revisions, would lower the Republican plan's seven-year savings total by about $15 billion. The plan would save a total of $168 billion. That's the same total proposed by a group of conservative Democrats known as "Blue Dog Democrats." That proposal called for a 1996 conversion factor of $36.40, but an even slower allowable growth rate than the Clinton budget.
American College of Surgeons spokeswoman Linn Meyer applauded the emerging consensus for the transition to the single conversion factor rather than an abrupt change.
Many physician groups, including the American Medical Association and primary-care specialty groups, support a transition to a single conversion factor. Primary-care physicians have contended that the higher surgical conversion factor undermined the 4-year-old physician payment system because it originally aimed to reward less-expensive primary-care services.
The surgery conversion factor now is higher because the payment system rewards categories in which volume grows more slowly, as a way of controlling the Medicare program's costs.
Charles Huntington, Washington office director for the American Academy of Family Physicians, said a phased-in single conversion factor would be "better than nothing."
If no budget deal is struck, as many observers now fear, "we'll be stuck with these divergent conversion factors for the next two years," he said.