Medicare Plans to Pay More for Office Visits : Health: Reimbursements for surgery would be cut. New emphasis is on preventive care and uniform fees.

The federal government unveiled a national fee schedule Friday for doctors who treat the nation’s 33 million Medicare beneficiaries. It offers major increases for office visits and consultations with patients but sharp reductions in payments for surgery.

The proposed fee plan would replace a complex system of highly variable reimbursements with a uniform set of charges determined by Washington. By affecting one of the biggest single sources of physician revenue, it could lead to dramatic changes in the way medicine is practiced in the United States.

The new system would greatly increase payments to general practitioners at the expense of such specialists as anesthesiologists and surgeons who perform coronary bypass operations and cataract removals. It will benefit physicians practicing in rural areas, while reducing reimbursements to doctors in high-cost cities and states, including California.

The shift is “the most significant change since Medicare’s inception in 1965,” Gail Wilensky, head of the Health Care Financing Administration, said at a news conference. The plan, which covers charges for more than 4,000 procedures, will be open for public comment until Aug. 5. A final version will be published in October.

The American Medical Assn. said Friday that it supports the idea of a simpler, more uniform payment system but contended the proposal is “inconsistent” with Congress’ intent to create fairer payment levels. The AMA called the plan a “great disappointment.”

The American Academy of Family Physicians was also critical of the proposal.

“We are disappointed that it appears that (Medicare) or the Office of Management and Budget has decided to approach this as a budget-reduction strategy and not as a transition to a new physician payment system,” said Robert Graham, the group’s executive vice president.

However, Wilensky said that unlike most bureaucratic reform programs, the fee plan is not designed to save money. Rather, it is intended to change the type of care Medicare patients receive, encouraging consultation and preventive advice and discouraging expensive surgery that may not be necessary. Because there would be less variation based on a physician’s geographic location or billing practices--big factors in the current reimbursement schedule--patients would be able to easily determine in advance the cost of treatments.

Under the new system, Wilensky noted, a local senior citizens’ group or other organization could assemble a list of the 25 or 30 most common medical procedures and inform the public of the exact reimbursements permitted by Medicare.

The new system would begin to take effect on Jan. 1, 1992, when all fees currently within 15% of the new standards would be moved up or down to match the national figures. Those fees varying more than 15% would be adjusted to the Medicare scale over the next four years.

Instead of reducing overall outlays to physicians--outlays actually are expected to rise to $50 billion by 1996 from the current $32 billion--the new system would shift money around among different members of the medical profession.

For example, the reimbursement for a typical office visit, now billed at $38, would rise to $45 next year. But Medicare’s reimbursement for hip-joint replacement would drop to $1,888 from $2,111. Payment for a coronary artery bypass operation would fall to $2,892 from $3,181, and the price of a total hysterectomy would decline to $878 from $983, according to figures issued by the Health Care Financing Administration, which operates Medicare.

When Congress passed legislation in 1989 ordering development of the fee schedule, legislators were convinced that the government was paying too much for procedures, such as surgery and radiology, and too little for office visits and consultations. Lawmakers believed also that rural doctors were getting too little and physicians in the cities charged too much.

By 1996, when the fee schedule is fully implemented, general practitioners would get 16% more than they receive under the current system, according to government estimates. Physicians classified as family doctors would receive 17% more. Optometrists and podiatrists also would receive substantial gains.

The big losers would include anesthesiologists, who now bill hospitals on an hourly basis for their services. These specialists would receive a fee fixed by the government and their payments are expected to plunge by 16%, compared to the current system. Radiologists would face a 14% reduction in payments and general surgeons a 9% drop.

As a result of these shifts, the new fee schedule is expected to move more medical students toward general and family practice and away from specialties--especially if the plan is copied by private insurance companies. The government currently provides about a third of all money earned by doctors in the United States.

Although the new system would allow some regional variation in reimbursements based on the cost of maintaining a medical practice, the price gap would be narrowed significantly. Payments to doctors in California, for example, would fall 3%, compared to the fees that they receive under the current system. Other losing states would include Arizona, down 3%, and Florida, down 4%. States with projected increases in payments would include Mississippi, up 7%, and Colorado, up 6%.

In addition, fees would drop in high-cost metropolitan areas such as Los Angeles and New York, where the charges are far above the national average.

The projected changes are based on comparisons of future reimbursements under the fee schedule with payments under the current system. The estimates take into account the expectation that some doctors would perform more procedures on their patients in an effort to maintain their incomes.

Despite the reductions, total payments to doctors are not expected to decline, even in high-cost areas. The amount of money paid by Medicare to physicians in California, as well as throughout the entire nation, is expected to rise steadily at an annual rate of 10%.

The overall gains reflect the fact that both the size and average age of the Medicare population are increasing--those over 85 are the fastest-growing segment of the American population. In addition, expensive new technology can be expected to continue adding to the cost of medical care for all Americans, including Medicare beneficiaries.

As part of the new payment system, federal officials plan to design “global” reimbursements for surgery, creating a single fee to cover office visits before the operation, the surgery itself and treatments and visits for 90 days after the surgery.

The radically transformed payment system would “improve Medicare reimbursement for the primary care so often provided by the family doctor and the general practitioner,” said Health and Human Services Secretary Louis W. Sullivan.

The new fee schedule would cover doctors, dentists, podiatrists, chiropractors and occupational and physical therapists.

Sampler of Medicare Fee Changes

Average current fee Fee in 1992 Office visit $38 $45 Total hip joint replacement $2,111 $1,888 Coronary bypass $3,181 $2,892 Prostatectomy $837 $748 Hysterectomy $983 $878 Cataract removal and lens insertion $1,342 $1,217

Source: Health Care Financing Administration