Primary-care physicians object to a revised federal regulation that would reduce the Medicare revenue shifted to them from surgeons and specialists more than a previous plan would have.
In comments filed with HCFA, primary-care groups said they oppose the agency's revised proposal for changing Medicare's formula for reimbursing physicians' practice expenses because it would "lock in" existing payment inequities.
Surgeons and specialists, along with the American Medical Association, however, said the proposal better ties practice-expense reimbursement to actual costs.
The physician groups were responding to a proposed rule published in June in the Federal Register that would enforce a change to "resource-based" reimbursement for such practice expenses as rent, office labor and equipment (June 8, p. 10).
A 1994 law called for changes to resource-based compensation. That law came about because primary-care groups argued the current system for reimbursing practice expenses, which is based on historical charges, pays surgeons and specialists more than they deserve. Medicare already pays physicians for their professional work using a resource-based formula.
At stake is about $4 billion, some of which is likely to be diverted to primary-care physicians from surgeons and specialists. Practice-expense payment represents about 41% of physicians' total Medicare reimbursement.
Required by the federal balanced-budget law, the proposed new rule revamps one released the previous year, which would have resulted in some specialists losing one-fifth of their Medicare income.
Under the new rule, cardiac surgeons and gastroenterologists stand to lose the most-14% of their Medicare income.
Family physicians would see a 6% increase in Medicare income, whereas before they would have seen a 12% increase.
The reduction-in-payment shift occurs because HCFA calculated fees differently. Previously, HCFA began with estimates of the inputs related to each procedure and built a reimbursement schedule based on the prices of those inputs. That proposal was known as the "bottom-up" approach.
In the new rule, however, HCFA used a top-down approach that relied on AMA data to estimate the hourly costs of running a practice in various specialties. Those costs were then allocated to specific procedures to arrive at a final payment.
Because those AMA data rely on historical payments, primary-care groups said, the top-down formula will continue to unfairly overpay some procedure-oriented specialties.