The Physician Payment Review Commission report to Congress

Article Abstract:

The Physician Payment Review Commission (PPRC) developed proposals to improve Medicare payments to physicians and to slow the rate of increases in Medicare costs. Medicare is the nations' largest payer of medical bills, and expenditures for physicians' services are the fastest growing (15 percent average annual rate of increase) component of Medicare-related payments. At present Medicare uses a "fee based" payment system for reimbursing physicians, but the need to control spending has prompted the PPRC to recommend a "cost based" method of reimbursement. The PPRC also states that the proposed Medicare "Fee Schedule" should cover all medical specialties for which separate fee schedules now exist. Physician fees, under the new payment system, would be based on a "relative value scale" (RVS) which indicates the value of each service or procedure relative to other medical services. The RVS would then be adjusted according to a "conversion factor" which translates into a fee for each service. The converted RVS would undergo a final adjustment by applying a "geographic multiplier", which indicates how payment for a service varies from one area of the country to another. It is hoped that the adoption of a Medicare Fee Schedule will rationalize physician payments by tying them to the cost of resources used in the delivery of medical services. Furthermore, this new system should be easier for both physicians and Medicare beneficiaries to use than the existing system of payments.

Finance, Reports, Medical fees, Relative value scale payment systems (Medical care)

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Physician response to fee changes: a contrary view

Article Abstract:

The Physician Payment Review Commission found that the Omnibus Budget Reconciliation Act of 1987 (OBRA 87) significantly influenced physicians' billing patterns. OBRA 87 reduced the amount Medicare would reimburse physicians for certain overpriced surgical procedures and tests. The Health Care Financing Administration assumed that physicians would compensate for these fee reductions by billing for more services, a process known as behavioral offset. A 1993 study that compared Medicare physician claims from 1987 and 1989 found that the fee cuts did not result in behavioral offset. However, the Commission's interpretation of the data indicated that surgeons offset approximately 50% of the fee cuts legislated by OBRA 87. However, they offset only about 1/3 of the OBRA 89 cuts and less than 20% of the OBRA 90 cuts. At the same time, non-surgeons offset about 60% of the OBRA 89 and 90 cuts. This suggests that surgeons' attempts to offset the cuts have diminished while non-surgeons, who are less affected by the cuts, continue to offset them.

Medical economics, Economic aspects, Column

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Reforming graduate medical education: summary report of the Physician Payment Review Commission

Article Abstract:

The Physician Payment Review Commission has recommended reforms in graduate medical education that include setting congressional limits on the number and type of residency programs and funding programs based on their quality. The commission recommends reforming the graduate medical education system because the supply of doctors will soon exceed the demand for their services and because there are too many specialist physicians and not enough general practitioners. Also, there is concern that many newly trained doctors have a dearth of experience in ambulatory care settings. The commission recommends establishing a federal body to determine the distribution of residency specialties. Members of the commission also believe that medical school admissions should be capped at the number of US medical graduates plus 10%. This scheme would allow for the phasing in of limits on how many residents could practice a certain specialty. Graduate medical education should be funded by all insured people, including those who are self-insured.

Evaluation, Graduate medical education

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