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Buntin MB, Escarce J, Goldman D, et al. Determinants of Increases in Medicare Expenditures for Physicians' Services. Rockville (MD): Agency for Healthcare Research and Quality (US); 2003 Oct. (Technical Reviews, No. 7.)

Cover of Determinants of Increases in Medicare Expenditures for Physicians' Services

Determinants of Increases in Medicare Expenditures for Physicians' Services.

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Appendix FLegislative Changes to Prices and Coverage, 1994-1998

1994
  • Refinements made in the RVUs for 1993 and 1994 including projected increases in primary care services payment rates and reduced payment rates for most surgical services and many nonsurgical services other than primary care.
  • Physician fee schedule update would increase the performance standard rates of increase for surgical, primary care, and other nonsurgical services.
  • A payment freeze would affect nonsurgical services other than primary care.
  • Lower payment limits were established for clinical laboratory services.
  • OBRA '93 also included a provision to lower payment for practice expenses for certain services paid under the physician fee schedule. This provision would lower the VPS for both surgical and nonsurgical services.
  • An OBRA '93 provision that limited payment for the anesthesia care team would also reduce the surgical services VPS.
1995
  • Refinements made in the RVUs for 1994 and 1995 would reduce payment rates for most surgical services and many nonsurgical services other than primary care.
  • adjustments to the physician fee schedule updates would increase the volume performance standard rates for surgical, primary care, and other nonsurgical services.
  • Nonsurgical service payments, other than primary care, were frozen.
  • A lower payment limit for clinical laboratory services was introduced.
  • OBRA '93 lowered payment for practice expenses, resulting in a lower VPS for both surgical and nonsurgical services.
  • OBRA '93 limited payment for anesthesia care teams, which would also have the effect of reducing the VPS for surgical services.
1996
  • RVU refinements for 1995 and 1996 would increase some payment rates; therefore, the volume performance standard for primary care services would increase while there would be reduced payment rates for most surgical services and many nonsurgical services other than primary care.
  • Lower payments for practice expenses for certain services paid under the physician fee schedule would reduce the VPS for both surgical and nonsurgical services.
1997
  • Changes in the RVUs for 1996 and 1997 would cause increased payment rates for primary care services and increases in the volume performance standard for those services.
  • Payment reductions would occur for most surgical services and many nonsurgical services other than primary care, which would lower the volume performance standard rates of increase for these services.
  • A volume and intensity adjustment for 1997 was required to ensure that changes in volume and intensity related to the fee changes did not cause an increase in expenditures. The MVPS targets are increased by this volume and intensity adjustment.
1998
  • Legislative changes contained in the Balanced Budget Act of 1997 included a single conversion factor for the Medicare physician fee schedule, which would cause the payments for surgical services to decline, while increasing the payments for nonsurgical services. These measures would cause an overall increase in expenditures for fiscal year 1998 relative to fiscal year 1997.
  • Coverage changes for screening mammography, colorectal cancer screening, screening PAP smears, and screening pelvic exams would cause increases in Medicare expenditures.
  • Changes in payments for nurse practitioners, clinical nurse specialists, and physician assistants would also increase expenditures.
  • Provisions relating to payments for laboratory services would cause reductions in Medicare expenditures. (Laboratory service payments were frozen for fiscal years 1998-2002.)
  • Fee changes associated with implementation of the 1998 physician fee schedule: the volume and intensity of physician services provided to Medicare beneficiaries would increase by 0.1 percent, but in order to prevent an increase in expenditures as a result of this volume and intensity response, an offsetting 0.1 percent reduction is made to the conversion factor.

RVU = relative value units.

OBRA = Omnibus Budget Reconciliation Act.

VPS = volume performance system.

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