Medicare's physician payment form - includes bibliography

Physician Executive, Sept-Oct, 1990 by Richard M. Lauve

RBRVS, while budget neutral from the payer's perspective, is certainly not neutral to most physicians. Not only will fee schedules be based on the resources used in providing a service, but also geographic adjustments to these fees will exclude 75 percent of the work component of each service (about 40 percent of each fee), eliminating much of the geographic variation in physician fee schedules. [15] If we add the 10-30 percent cuts that proceduralists may suffer under the RBRVS system to the geographic adjustments loss that will decrease payments to physicians in "very large metropolitan areas" by 14 percent, we can understand why surgeons in New York (faced with a 24-44 percent decrease in payments from Medicare) oppose RBRVS. [16] Rural physicians delivering primary care are, of course, the big winners under RBRVS. In the long run, these geographic adjustments, combined with the bonuses for medically underserved areas, will have the desired effect of moving some proceduralists to rural areas. Because surgeons are (and will continue to be) less than a third of U.S. physicians, the majority of physicians will continue to support RBRVS. [17] l

Physicians not currently accepting assignment on Medicare claims also face a mandatory decrease of their charges under BBC. Their new billing limit will be set at 115 percent of the 95 percent of Medicare allowance required for nonassigned claims (or 9.3 percent above the allowance for assigned claims). With the average Medicare allowance about 70 percent of the average charge, nonparticipating providers by 1992 will be required to discount their 1989 charges approximately 20 percent.

Physicians currently accepting assignment are unlikely to change to a nonassigned status in order to realize the 9.3 percent increase in billings (with the elimination of the Medicare contract allowance). The BBC is even less important than initially apparent, because only 20 percent of charges for covered services are currently balance billed. [16] Balance billings may also be overrepresented by specialties providing small proportions of total Medicare allowed charges. For example, anesthesia charges represent 13 percent of balance billed dollars but only 4 percent of Medicare allowed charges. [16] These statistics suggest that most physicians may be indifferent to BBC and that the minority of physicians who should be concerned about BBC may be hurt significantly by the limit. For procedure-oriented specialties with large Medicare patient loads and high balance billing amounts, income decreases may be enough to cause reductions in supplies of providers.

Providers are therefore likely to see VPS as arbitrarily constraining their charges. The VPS formula is complex enough, however, that physicians may not recognize for several years the source of their frustration. The majority of physicians will support RBRVS. BBC is more difficult to evaluate. Even with the limit set at 115 percent of the Medicare allowance (or 109.3 of the participating physician's Medicare allowance), this facet of the reform package will receive provider support in the short-term principally because most physicians have accepted assignment. [16]