It took somewhat longer for federal health officials to tackle payment on the physician side. Throughout the 1980s, Congress froze physician payment rates in an effort to address rising costs. In 1984, Congress established the Participating Physicians’ Program, which required physicians to accept assignment for all Medicare patients and services rather than on a service-by-service basis. It also barred balance billing of Medicare beneficiaries.
Photo courtesy of White House
President Harry S. Truman received the first Medicare registration card in 1965.
In 1989, Congress made the most significant change yet to physician payment, creating the Resource-Based Relative Value Scale (RBRVS) under the Omnibus Budget Reconciliation Act. Medicare officials used the new RBRVS to establish a standardized physician payment schedule in 1992. Under the new system, payments were determined by calculating the costs of physician work, practice expenses, and professional liability insurance. Payments are then adjusted by a conversion factor and geographic cost differences.
“The impact of the fee schedule all depends on where you sit,” said Paul B. Ginsburg, Ph.D., director of health policy at the Schaeffer Center for Health Policy and Economics at the University of Southern California.
The fee schedule was positive for primary care physicians at first, but a flawed updating process over the decades led to differences in Medicare payments by specialty, largely favoring procedural specialists over those who billed for evaluation and management services.
But Dr. Ginsburg said Medicare is now on the cusp of an even more important payment change as federal officials begin to move away from fee-for-service and toward payment approaches that emphasize quality and value.
While some new payment model experiments have been promising, the attempts by the Centers for Medicare & Medicaid Services have been “fumbling,” Dr. Ginsburg said.
Changing physician satisfaction
Medicare beneficiaries are typically happier with their health coverage than individuals enrolled in private, employer-sponsored insurance and are less worried about financial barriers to care, Dr. Guterman said.
“I think it’s fair to say that it’s one of the more popular federal programs ever,” he said. “You hear people frequently talking about how touchy it is to make any changes to the program because people are very wary of having that benefit diluted.”
That’s not the case for physicians.
Courtesy of the Texas Medical Association.
Dr. Austin King
“The physicians I’ve talked to over the last 2 years feel like they’re drowning in red tape,” said Dr. Austin King, president of the Texas Medical Association and a head and neck surgeon in Abilene.
The result is that physicians are becoming employees in large physician practices or hospitals, or they are moving to set up boutique practices, Dr. King said. “Right now, the physicians are not real happy with the program.”
Dr. King predicted that physicians will continue to move out of the program, creating patient access issues, unless Congress gives them a way to recoup their costs, such as through the practice of balance billing.
Resolving issues like the looming annual cuts from the Sustainable Growth Rate formula and eliminating the Affordable Care Act’s Independent Payment Advisory Board would put some predictability back into the system, Dr. King said, adding that it’s not enough because it would still leave the numerous regulatory requirements, which many physicians “agonize” over.