Medicare Changes Favor Family Doctors

Health and Human Services Secretary Louis W. Sullivan Friday completed a radical change in the way Medicare pays doctors, setting new fees that will reward those in family practice and cut payments to some specialists.

The new fee system, to go into effect Jan. 1, will likely be embraced by private insurers as well as the Medicare system, and its proponents believe it could steer more doctors toward general and family practice and perhaps even away from cities to rural areas.

Under the uniform nationwide fee schedule, every doctor performing a specified type of service for a Medicare patient, such as a bypass, will get essentially the same payment.

Until now, the system has allowed tremendous variations between doctors in different regions of the country and even between doctors in the same city, based on each doctor’s “usual and customary fee.”

The only adjustments now will be for local rent, office and insurance costs, and they won’t range more than 15% above or below the base fee.

Surgeons and other specialists will still be paid more than family doctors and internists, but the difference will not be so great. The average payment for a family physician in 1996, when the new system is fully implemented, will be 28% more than it would have been under the present system. But the average thoracic (chest) surgeon’s payment will be 27% less.

The average office visit payment for an established patient would rise from about $57 in 1991 to $66 in 1992 under the new schedule. By contrast, the average payment for a coronary artery bypass, $3,178 in 1991, would be $2,726 under the new schedule.

Gail Wilensky, Medicare program director, said it is unlikely that the new fee system will cause many doctors to decline to treat Medicare patients.

She and others hope the new payment schedule will reduce incentives to perform unnecessary surgery and other highly paid treatments, which some studies have indicated are performed more often than medically necessary.

Congress in 1989 directed the Administration to set up such a system, and doctors were unhappy with the first proposal from Wilensky in May. Physician groups Friday said the new proposals are better than those first released by Wilensky, and said they hope to make more changes next year.

Doctor groups argued that in Wilensky’s initial proposal May 31, the Administration ignored the intention of Congress by cutting total payments to doctors by at least $7 billion by 1996. They said she had raised family practice and similar services less than was really justified, and cut surgery and other specialties more. The medical groups sought to force changes and received backing from Rep. Pete Stark (D-Oakland) and Sen. John D. (Jay) Rockefeller IV (D-W.Va.), sponsors of the legislation that authorized the new system.

Sullivan and Wilensky rewrote the rules in a way that officials claimed Friday would mean no loss in total payments during the next five years, compared with what they would have been under previous law. Not everyone agreed.

“The Administration has broken faith with the nation’s doctors and the Congress,” said Stark. “If a doctor had written these regs (regulations), he would be sued for malpractice.”