Medicare physician payment reform: a view from the field - survey of physicians in California

Healthcare Financial Management, Nov, 1993 by Kathleen E. Hughes

PAYMENT

On Jan. 1, 1992, a major revision process was initiated to change the method by which the Medicare program pays for physician and other professional services. The changes, to be phased in over a five-year period, included payment on the basis of a resource-based relative value scale (RBRVS) and prospective global budgeting for all physician and other professional service payments. Before and shortly after the reform process began, many predicted that far-reaching changes in physician practice would occur as a result. The findings of a survey of physicians in California on the effects that Medicare physician payment reforms had on their practices during 1992 indicate that these predictions may have been exaggerated.

To assess the effects of revisions to the method by which the Medicare program pays for physician and other professional services, 2,700 physicians practicing in California were surveyed, either by personal interview or with paper survey instruments distributed in public settings such as practice fairs, professional meetings, trade shows, or similar forums. No attempt was made to match precisely the demographics of physicians of the United States as a whole.

The demographic characteristics of the survey respondents are summarized in Exhibit 1. Practitioners in primary care specialties formed the majority of respondents to the survey. Younger physicians were predominant; no physician over the age of 60 chose to participate in the survey. All physicians surveyed were practicing in the State of California, 70 percent in urban and suburban areas, and 30 percent in rural areas. The overwhelming majority of respondents were in private practice.

Effects on revenue

The first series of survey questions concerned the effects payment reforms had had on the amount of revenue physicians received from Medicare in 1992. It should be noted that respondents were asked to make quantitative responses to these questions without the benefit of records. As such, the responses should not be viewed as precise assessments of economic impact.(a)

Almost 14 percent of the physicians surveyed indicated that their revenue from Medicare had increased, 59 percent indicated that their revenue had decreased, and 27 percent said that it had stayed approximately the same. Only internists (33 percent) and family practitioners (67 percent) indicated that their Medicare revenues had increased.

At least one member of each of the specialties represented in the survey indicated that his or her revenue from Medicare had decreased in 1992. This included a small percentage of internists and family practitioners in addition to the specialists.

Many of the physicians who responded that their 1992 Medicare revenue was approximately equal to the 1991 level were those whose practices traditionally do not include a large proportion of Medicare patients (e.g., obstetricians/gynecologists and psychiatrists). Some general and family practitioners, however, answered this way as well. Exhibit 2 provides additional detail on the responses to the questions regarding revenue.

Practice changes

The survey also queried physicians regarding practice changes they or their colleagues had made or would have to make in the future to adapt to Medicare payment reforms. The survey listed 20 potential changes in physician practices (determined through research conducted prior to the survey and selected as relatively commonplace) and asked respondents to use the list to identify changes in four categories: practice changes made personally in 1992; practice changes made by colleagues in 1992; practice changes likely to be made personally in the future; and practice changes colleagues would most likely have to make in the future.

Exhibit 1: Survey demographics
n=2,700

Specialties represented:

Family practice                  30%
Internal medicine                22%
Obstetrics/gynecology            11%
General practice                  7%
Cardiology                        7%
Orthopedics                       4%
Ophthalmology                     4%
General surgery                   4%
Gastroenterology                  4%
Psychiatry                        4%
Podiatry                          4%

Specialty of respondent:

Primary care                     59%
Specialty care                   41%

Age of respondent

Under 30                          4%
31 to 40                         36%
41 to 50                         44%
51 to 60                         16%
60                                0%

Geographic areas:

Urban                            70%
Rural                            30%

The five changes most often cited were:

* Take a more cost-effective approach to clinical practice,

* Attend educational seminars on practice management,

* Improve billing and collections,

* Improve current procedural terminology (CPT) coding or other coding, and

* Provide clinical education to office staff.

The five changes most often cited as those already having been made include:

* Attend educational seminars on practice management,