A change in Medicare policy regarding payments for consultations vs. office visits had the unintended consequence of raising overall costs the first year it was implemented, according to a report published online in Archives of Internal Medicine.
Prior to 2010, the Medicare Physician Fee Schedule provided higher payments for consultations than for office visits at every level of complexity. For example, in 2009 Medicare paid $124.79 on average for a consultation of medium complexity, compared with $91.97 for a new patient office visit and $61.31 for an established patient office visit of similar complexity.
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CMS eliminated payments for consultations altogether, so that all outpatient physician encounters would be billed as office visits, and simultaneously raised the fees for office visits
Since primary care physicians billed primarily for office visits and specialists billed primarily for consultations, this resulted in a large discrepancy in reimbursement between primary and specialist physicians for doing similarly complex work, according to Zirui Song, Ph.D., of the department of health care policy, Harvard Medical School, Boston, and his associates.
With the fee schedule for calendar 2010, the Centers for Medicare and Medicaid Services eliminated payments for consultations altogether, so that all outpatient physician encounters would be billed as office visits, and simultaneously raised the fees for office visits. The change was designed specifically to be budget-neutral for the Medicare program.
Dr. Song and his colleagues assessed the effects of this policy change on Medicare payments in 2010. They used data from a sample of 2.2 million Medicare beneficiaries who had a diagnosis related to diabetes or cardiovascular conditions, or prescriptions for any cardiovascular or cholesterol-reducing drugs, and who were seen as outpatients in 2007 through the end of 2010.
During 2010, payments for consultations decreased an average of $18.52 per beneficiary per quarter.
However, payments for new patient office visits rose by $13.64 per beneficiary per quarter and payments for established patient office visits rose by $15.08 per beneficiary per quarter. This represents an increase of 131% in the number of new patient office visits billed to Medicare and an increase of 12% in the number of established patient office visits billed to Medicare, compared with the preceding year.
"On net, spending on all physician encounters was higher by $10.20 per beneficiary per quarter after the policy" for an increase of 6.5%, Dr. Song and his associates said (Arch. Intern. Med. 2012 [doi:10.1001/jamainternmend.2013.1125]).
The volume of patient encounters did not increase during this period, the researchers found. Rather, it appears that "an increase in the intensity of coding" was responsible for approximately one-third of the 6.5% rise, while the fee increase for office visits was responsible for the other two-thirds.
The income gap between specialists and primary care physicians did narrow somewhat after this policy change was implemented. Primary care physicians accounted for a slightly greater proportion (58%) of the rise in spending than did specialists (42%), the researchers noted.
They added that this study pertained only to Medicare payments for outpatient encounters, and did not address all other physician services. "The overall discrepancy in Medicare payments" between primary care and specialist physicians "derives largely from procedural services, which this policy does not address," Dr. Song and his colleagues said.
Similarly, this study examined only the policy’s effect on the first year after implementation, and these results may not be generalizable to longer term effects, they said.
This study was supported by The Commonwealth Fund, the National Institute on Aging, and the National Bureau of Economic Research. The investigators reported no relevant financial conflicts of interest.