U.S. Acts on Nationwide Fee Schedule for Medicare : Health: Proposal is the first step toward a scale for medical services. The final plan is to take effect in 1992.

In a historic move, the Bush Administration on Friday sent Congress a proposed drastic revision in Medicare fees--the first step toward establishing a nationwide fee scale covering more than 7,000 physician services from X-rays to heart surgery.

The model price schedule would pay internists more and surgeons somewhat less than they currently receive for certain procedures, and would narrow the income gap between rural doctors and their big-city colleagues.

Under current law, the precise and detailed fee schedule would take effect in January, 1992, establishing unprecedented government control over the bills that are charged by the 500,000 physicians who treat Medicare beneficiaries.

Although it would apply only to cases involving Medicare patients, the government fee schedule would be almost certain to have an influence on fees charged by physicians for other patients as well.

Louis H. Sullivan, Secretary of the Department of Health and Human Services, said the move to a nationwide fee scale for Medicare would mark “the most wide-ranging and fundamental changes in Medicare’s physician payment system” since the program began in 1965.

The Health Care Financing Administration, which administers the Medicare program, predicted the move would produce major shifts in income among various groups of doctors and that some would find their incomes reduced as much as 15% to 20% or more.

In general, the new system will give surgeons less than they currently receive, while internists will get more. And the government will pay more for office visits, but less than it does now for operations.

Gail Wilensky, the Health Care Financing Administration’s chief, said that whenever practical, the new system will shift patients to primary-care services, such as office visits and consultations, and away from expensive procedures such as surgery.

It also is expected to provide the federal government with a powerful tool to help hold down medical costs, which have been skyrocketing in recent years with the onset of new technology and more sweeping health-insurance benefits.

After 1992, the new law also will enable the secretary of Health and Human Services to squeeze medical payments, in an effort to control Medicare spending, by establishing an overall national target for total Medicare outlays for doctor bills.

If actual outlays exceed that target, the secretary can reduce reimbursements for particular procedures the following year.

Wilensky said the new system also would reduce the wide variation in fees between urban and rural areas, increasing payments for many physicians in rural areas.

Currently, Medicare payments are determined by a confusing and complex system in which the amount the government agrees to pay is linked to the fees that a particular physician has charged in the past and to the fees that seem to prevail in his community.

Medicare generally pays 80% of the so-called local reasonable and customary fee for the particular service, but a physician may charge more than that, and the patient is responsible for paying the difference.

As a result, the current system produces wide differences in fees, both among medical specialties and among individual localities.

Congress last year approved legislation requiring the creation of a single fee schedule that would provide the same payment to all doctors for performing the same procedure--with some minor adjustments for local variations in office costs and malpractice insurance premiums.

Under the new law, the federal government will--for the first time in history--be able to direct precisely how much a doctor can charge for each specific treatment given to Medicare beneficiaries, that is, people over age 65 and the disabled of all ages.

Among the various fees proposed under the model schedule disclosed on Friday are $61.80 for a comprehensive office visit for a new patient; $263.30 for removal of a breast lesion and $2,264.20 for total replacement of a hip.

The listing sets a fee of $266.90 for catheterization of the right side of the heart. In all, the schedule covers some 1,400 services that make up two-thirds of all Medicare procedures.

In a letter to Congress made public on Friday, Sullivan cautioned that, for now, the fees “are very preliminary and should be used as illustrative only.”

“We are inviting physicians and other interested parties to evaluate and comment on the model fee schedule,” he said.

U.S. officials said the preliminary fees in Friday’s listing will be refined during the coming year, and the Health and Human Services Department will develop standard charges for other Medicare services that have not been covered in the new fee schedule.

“This approach underlines our earnest desire to solicit the views and build on the experience of physicians, beneficiary groups and others in the public to produce a Medicare fee schedule that is workable and fair,” Sullivan said.