HCFA's effort to revise the way Medicare pays physicians for their overhead expenses has failed, so let's get rid of it and start over.
The more than 30 national medical specialty societies that make up the Practice Expense Coalition are asking Congress to tell HCFA to scrap the current project, consult with experts in cost accounting and come back with recommendations on how to proceed. Congress can then review them and decide if they make any sense. If they do, then Congress can pass a law that sets a new implementation schedule.
With HCFA expected to publish its proposed rule on practice expenses any day now, the agency doesn't have reliable data upon which to anchor its conclusions.
What HCFA has produced to date would significantly redistribute Medicare practice-expense payments ($8 billion, according to some estimates) without any evidence that the proposed system has any validity or bears any resemblance to the real-world practice of medicine.
Despite spending $2 million on this project, HCFA is no closer to finding answers than it was three years ago. The only thing that is close is the Jan. 1, 1998, implementation date for a new Medicare practice-expense payment system. Congress should strike this deadline and take a fresh look at the problem.
Congress, HCFA and the physician community have worked since 1992 to build a physician fee schedule that is based on the resources doctors actually use when they provide medical and surgical services to Medicare beneficiaries. Nearly 10 years of work went into developing and refining the physician work relative values.
HCFA has only focused on practice expenses-which account for about 40% of each Medicare payment to physicians-for less than four years. In 1994, Congress told HCFA to construct resource-based relative values for practice expenses to replace the ones based on historic charge data. HCFA's answer, released in preliminary form in January, doesn't meet the resource-based test because HCFA has failed to measure physician overhead costs with any degree of accuracy.
HCFA canceled the survey of physician practices that would have produced data on indirect costs, and preliminary reviews of the direct cost data suggest problems with the accuracy of many items. Is it any wonder so many physicians and their medical societies have raised concerns about basing a massive redistribution of practice-expense dollars on this untried system?
It's important to note that these changes would not be limited to Medicare, since so many private health plans use part or all of the fee schedule as a basis for paying physicians.
This entire article and several others could be devoted to the methodological problems with the practice-expense study, the erroneous assumptions HCFA has made about the data (for instance, all medical equipment is in use 70% of the time, and all physicians have the same ratio of direct to indirect costs) and the multiple failures to collect accurate data about what it costs any physician to provide any service.
It's astounding that some physicians and their medical societies insist this jumble is better than what Medicare uses today, even though today's practice-expense payments are based in part on the historic charges of their own members. No physician in his or her right mind would base a diagnosis on the kind of data HCFA has today.
Ardent supporters of the new practice-expense scheme argue it is "fair" and the current system is not. They make the deceptively simple argument that one of their primary-care members would have to make 115 office visits to equal the practice-expense payment of a coronary artery bypass graft. They argue that their members and staff spend hours with patients for this money. What they fail to point out is that the surgeon and her staff often spend equal or greater amounts of time with the patient during the surgical global period of many surgeries and receive a practice-expense payment that may not even equal the payment received by the primary-care physician for those visits.
The proponents of the resource-based practice system insist this study can be cleaned up, given enough time. The Physician Payment Review Committee says "Full steam ahead!" and recommends a three-year transition to fix everything. But the Practice Expense Coalition doesn't understand how bad data, combined with questionable methodology, can be cleaned up. Unless HCFA collects new information that is accurate and develops a sound method for analyzing this information, there will be no basis for fixing the current proposal, no matter how long the transition may last.
Primary-care physician organizations that want to charge ahead act as if the impact of the changes will be limited to the pocketbooks of their members and won't have any negative effects on patients. The British generals probably thought the charge of the Light Brigade was a good idea, too. Who will write the poem for vascular surgery if HCFA has its way? Just how will primary-care physicians manage those diabetic limb salvage cases anyway?
The first places every member of Congress should look at are the academic medical centers in their own states and districts. According to the Association of American Medical Colleges, about one-third of the revenues of these academic institutions come from patient care provided by the institutions' faculties. Every dollar of that will be at risk if HCFA is allowed to persist in its work.
What are some of the potential consequences if academic centers, already hard-pressed by changing healthcare economics, are hit by this change? Patient-care dollars generated by faculty are redistributed to various functions in the medical center. After faculty salaries are paid, money goes to help support resident training. Maybe some of those Medicare dollars generated by specialized medical services even go to support primary-care training programs. What new money tree will grow to replace this current subsidy?
The practice-expense battle gives every appearance, at first blush, of being a squabble within the family of medicine over the size of everyone's allowance. Proponents of the practice-expense study would like everybody, especially Congress, to believe that. But nothing is further from the truth. This is a major challenge to excellence in medicine and the specialized knowledge and skill that is now available to us all.
After all, King Hussein of Jordan did not come to the U.S. because he needed an office visit from a primary-care doctor. He came here because of the outstanding reputation of specialty medicine and surgery in this country. Let's keep that intact for everyone, not just the kings and queens.
Fenninger is co-chairman of the Practice Expense Coalition.