It looks as if primary-care physicians will see an increase in their Medicare practice expense compensation next year, but the raise is a lot less than they wanted.
Sources close to budget talks between the House and Senate say the negotiators have decided to largely adopt the Senate's approach to the practice compensation issue. The plan would give primary-care doctors in 1998 some $390 million of the $4 billion in annual compensation they had been expecting.
Primary-care doctors are viewing the modest compensation as a "down payment" on money that would be shifted to them in the future. But specialists also would get some concessions since lawmakers would ask HCFA to re-examine its formula for redistributing practice expense funds over the long haul.
At deadline, details of the proposal were not clear. But sources close to the discussions said GOP negotiators had decided to call for the transfer of no more than $390 million in practice expense reimbursement next year from fees for surgical and specialty procedures to primary-care payments.
The proposal is opposed by surgical and specialty groups but favored by primary-care groups.
The Congressional Budget Office estimates physician practice expense compensation will account for 40% of the $30.7 billion Medicare will spend on physician payments in 1997.
The down-payment proposal would redistribute roughly 10% of what would be transferred each year from surgical and specialty procedures to primary-care services under a change in the practice expense compensation formula now scheduled to take place in 1998.
As part of the compromise package, however, HCFA would be required to review and revise its proposed practice expense compensation formula. The package also would delay further implementation of the new practice expense formula until 1999 and provide for a phase-in that ends in 2001.
Specialists and surgeons contend the data HCFA used to develop the new practice expense schedule are flawed.
Medicare currently pays physicians based on historical charges for such overhead expenses as rent, office staff and equipment related to serving Medicare beneficiaries. Primary-care physicians say that formula shortchanges them and overpays surgeons and specialists.
Under current law, HCFA in 1998 must begin paying overhead expenses based on the resources required to deliver the service-a compensation formula known as "resource-based" practice expense payment.
It would resemble a formula used since 1992 to compensate physicians for their work time.
In June, HCFA proposed a resource-based practice expense formula that would reduce Medicare revenues for some surgical specialties by nearly one-third but increase Medicare revenues for some primary-care services by nearly one-quarter (June 30, p. 22).
The Senate's original plan would have transferred at least $400 million in 1998 by reducing the maximum practice expense reimbursement physicians could receive for any single service to 110% of their work fees from 128%.
All the money would have been diverted to practice expense payment for 10 specific primary-care payment codes.
But that proposal actually would have reduced fees for some primary-care services that otherwise would see an increase under the HCFA resource-based practice expense plan.
Under the compromise being worked out last week, there would be no payment cuts for those services slated for an increase under the proposed rule.
Furthermore, money would be distributed to a wider number of services, although it was not clear how many new services would benefit.