American College of Physicians: Internal Medicine — Doctors for Adults ®

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Medicare's new pay plan to reflect office expenses

From the July/August 1998 ACP-ASIM Observer, copyright © 1998 by the American College of Physicians-American Society of Internal Medicine.

After studying how much it actually costs doctors to deliver specific patient care services, Medicare has proposed changing its fee schedule to better reflect these resource-based practice expenses.

In general, the proposal is expected to send more money to primary care physicians while reducing the income of surgeons and other specialists who work largely in hospitals. According to HCFA's calculations, however, the effect on internists, who provide both kinds of services, is likely to be minimal. ACP-ASIM is currently evaluating how well the proposed new system would work for internal medicine.

The new plan was created to correct differences in fees paid for primary care and surgery to more accurately reflect the resources a physician uses, HCFA explained. When the Medicare fee schedule was implemented six years ago, part of it was based on historical charges, not relative values.

Medical societies have until Sept. 3 to comment on the proposed rule, and HCFA has until Jan. 1, 1999, to adopt resource-based practice expenses. For more on the proposed rule, see Practice expense payments: Will internists get a fair deal?

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