Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #114270

Stephanie L. Maxwell, PhD and Stephen Zuckerman, PhD. Health Policy Center, Urban Institute, 2100 M Street, NW, Washington, DC 20037, 202-261-5825, smaxwell@ui.urban.org

Research Objective: Physician payments comprise about 30% of all Medicare payments, and practice expenses (PE) are 42% on average of physician payments under Medicare's physician fee schedule. In 1999-2002, a resource-based methodology for determining PE payments was phased in, replacing a prior payment system based on physicians' PE charges. This study assessed the impact of the new payment methodology on PE payments (specifically, PE relative value units or RVUs) and total Medicare payments per service, by physician specialty, service type, and specialty/service type combination, and analyzed changes in beneficiary service use during the period.

Data and Study Design: The study used RVU files and summaries of 100% Medicare physician/supplier claims in 1998 and 2002. A price index methodology was used. Sensitivity analyses were conducted comparing Paasche (current year utilization) and Laspeyres (base year utilization) index methods, to determine whether more complex index methodologies were warranted. The Paasche index results are presented.

Principal Findings: The largest payment change by service type occurred for Evaluation/Management Services (E&M) and Major Procedures. Total payments per service among E&M increased an average of 2.4% annually due to the new PE RVUs, and fell 3.1% per service among Major Procedures. Total payments per service increased as a result of the new PE RVUs for ten of the 15 specialties analyzed. Dermatologists and urologists experienced the largest average annual gains, with total Medicare payments per service increasing 6.4% and 4.4% annually, respectively. Thoracic surgeons and gastroenterologists experienced the largest average annual losses, with Medicare payments per service falling 4.3% and 3.7%, respectively due to the new PE RVUs.

Total RVU volume per beneficiary grew over the period across all service types; increases ranged from 3.1% (Major Procedures) to 7.2% (Tests). Total volume grew across all specialties; the range of increase was much greater, from a low 0.2% annually for thoracic surgeon services to 8.2% annually for cardiology services.

Conclusions: The resource-based PE system redistributed payments across service types and specialties. Specialty-specific redistributions are related to the relative importance of particular service groups to a specialty and the PE changes affecting those services. Per beneficiary utilization grew across all specialties, but variation in that growth is not consistently related to the magnitude or direction of payment changes by specialty.

Learning Objectives: At the conclusion of the session, the participant in this session will be able to

• articulate the 3 main components of the Medicare physician fee schedule; and
• describe the impact of Medicare's recent implementation of a resource-based payment methodology for determining payments for one of these components -- physicians' practice expenses.

Keywords: Medicare, Physicians

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.

Recorded presentation