A report on HCFA's progress in developing a new Medicare fee schedule for compensating physicians for their practice expenses is giving ammunition to supporters and opponents of the schedule.
Physician group representatives last week reviewed the draft report, which was prepared by the General Accounting Office to comply with last year's federal balanced-budget law.
The law also postponed the use of the fee schedule until next year.
The report deals with HCFA's drafting of regulations to enforce a new "resource-based" schedule for reimbursing physicians for such costs as rent, labor, equipment and supplies.
The report criticized the way HCFA adjusted data in the schedule published by the agency last year (June 16, 1997, p. 4), said a specialty group representative, who spoke on condition of anonymity.
The report has yet to be released publicly, but several sources described it to a MODERN HEALTHCARE reporter.
Specifically, the GAO said HCFA linked all practice expense payment calculations to office visit fees, the specialty group representative said.
HCFA applied that linking technique because it believed surgeons were inflating their direct costs, such as labor, supplies and equipment. Because nearly all physicians bill for office visits, those services were considered the baseline from which all other adjustments should be made.
The GAO's draft report acknowledged, however, that HCFA will have to make an adjustment to negate the inflation of surgical costs, according to a primary-care group representative. The report suggested that HCFA standardize cost data for administrative tasks for all procedures and services.
It also criticized HCFA's handling of compensation for administrative and clinical staff time spent on procedures by setting a cap of 11/2 times the compensation for office visits.
But the draft report supported HCFA's use of consensus panels to develop data for the new schedule. It also agreed with the agency's decision to reject some surgeons' claims that they deserve reimbursement for the frequent use of their employees in hospital operating rooms.
The final GAO report is expected to be released publicly by the end of this month.
A 1994 law mandated a change to the resource-based formula that originally was set to begin Jan. 1 of this year.
The resource-based reimbursement schedule would be similar to the formula used to compensate physicians for their professional work.
At stake is about $4 billion a year in Medicare reimbursement that could be diverted to primary-care doctors from specialists and surgeons.
Responding to objections to HCFA's data-gathering techniques from specialists and surgeons, Congress last year delayed implementation of the law until 1999, mandated a phase-in through 2001, ordered HCFA to redraft the rules and directed the GAO to investigate HCFA's data-gathering techniques. But Congress also authorized a shift of about $390 million in 1998 to primary-care doctors.
Practice expense compensation represents about 41% of all payments to physicians. The Congressional Budget Office projects that Medicare will pay physicians $31.9 billion in fiscal 1998, which ends Sept. 30.