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

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College concerned about new method to calculate expenses

Will HCFA's 'top-down' approach lock in inequities in physician pay?

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

ACP-ASIM is concerned about HCFA's plans to change how it calculates and reimburses physicians for practice expenses.

The College fears that by using a "top-down" methodology—one in which HCFA would calculate future practice expenses by looking at current practice expenses—HCFA will continue to overpay certain subspecialties and undervalue office-based services. Earlier, HCFA had proposed a "bottom-up" approach that would pay physicians based on their real expenses rather than locking in historical inequities. The College supported the bottom-up approach because it would establish practice costs and corresponding payments using a variety of expense data, not just historical data. Under HCFA's latest proposal, however, a bottom-up approach is no longer being considered.

A College analysis of HCFA's various proposals showed that under the bottom-up approach, internists would have to provide 15 midlevel established patient office visits to obtain the practice expense reimbursement of a single coronary triple-bypass graft. Under the top-down approach that HCFA is planning to adopt, internists will have to perform 40 midlevel office visits to obtain that payment. (Under the old formula, internists had to perform 92 of those same procedures.) Overall, practice expenses for a midlevel established patient office visit would gain 22.5% more under the bottom-up proposal than under HCFA's top-down approach.

ACP-ASIM has suggested that HCFA recalculate physician expenses using three models—a top-down, a bottom-up and a hybrid approach—so that physicians and analysts can compare the approaches and give HCFA meaningful comments.

For more information on this issue and the College's position, go to the "Where We Stand" section of ACP-ASIM Online (www.acponline.org/home/policy.htm) and look for "Statement of the ACP-ASIM on the HCFA Resource-based Practice Expense Proposed Rule."

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