Eliminating Medicare payments for consultations led to net increase in spending

In an effort to decrease consultation payments to specialists while increasing payments to primary care physicians, CMS instituted a targeted policy for redistributing Medicare payments from specialists to primary care physicians in January 2010. CMS eliminated consultation payments from the Medicare Physician Fee Schedule and raised fees for office visits.

Data from a new study demonstrate that these adjustments led to a net increase in spending on visits to PCPs and specialists, although the total volume of patient visits did not increase significantly. “New” office visits mainly replaced consultations in 2010. On average, $10.20 more per beneficiary per quarter was spent on physician encounters after the instituted policy — a 6.5% increase.

According to researchers, the increase in spending was due to heightened fees for office visits, a shift toward higher-complexity visits and increasing coding intensity. Whether the gap in total Medicare reimbursements between PCPs and specialists changed depends on other physician services. The overall discrepancy in Medicare payments derives largely from procedural services, which this policy does not address, the researchers wrote in the study.

The researchers suggested the policy did not achieve its goal of budget neutrality in the first year, but appeared to narrow the gap in Medicare payments for office encounters between PCPs and specialists (58% vs. 42%, respectively). Since specialists received more income from consultations than PCPs did before 2010, the relative income gap was effectively narrowed.

To assess the impact of this policy, researchers examined outpatient claims from 2007 to 2010 for 2,247,810 Medicare beneficiaries with Medigap coverage through large employers.

“The necessary policy actions are fairly straightforward and basically involve 2 main imperatives. Fix the pay differential, and make providers’ lives easier,” Patrick G. O’Malley, MD, MPH,of the division of general internal medicine, Uniformed Services University, wrote in an accompanying editorial. “We need a more definitive and more intentional workforce policy plan and given the current morale of our adult primary care workforce, it will have to involve higher and more parity in pay as well as a substantial improvement in work hours and working environment.”

For more information:

O’Malley PG. Arch Intern Med. 2012;doi:10.1001/jamainternmed.2013.1124.

Song Z. Arch Intern Med. 2012;doi:10.1001/jamainternmed.2013.1125.

Disclosure: See the full study for a list of the researchers’ relevant financial disclosures. O’Malley reports no relevant financial disclosures.