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Implementation of a Resource-based Practice Expense Methodology to Calculate Practice Expense Relative Values for the Medicare Fee Schedule

			Related Resources Federal Register, June 5, 1998 AAMC Documents Issue Brief

AAMC Models Impact of Practice Expense Changes

AAMC staff have completed an impact analysis on total Medicare payments by specialty of the proposed resource-based practice expense relative value units (PE-RVUs) published by the Health Care Financing Administration (HCFA) (Federal Register June 5, 30818-31012). The analysis was completed using 1996 Medicare service volume data from a sample of 27 member practice plans. This current analysis is an update to a similar analysis performed last year when the 1997 proposed rule was issued by HCFA.

The 1998 rule is proposing an improved methodology that results in less dramatic payment reductions to surgical and procedure-oriented medical specialties and relatively small payment increases to primary care specialties. The impact by specialty is arrayed in Table 1 below. While the differences in impact between academic physicians as a subset of all physicians is difficult to explain, the impact on any given specialty, states HCFA, will depend upon the patient mix and utilization of services. The AAMC believes that patient mix will account for reductions in certain specialties that are projected to receive increases in payment nationally. For example, academic physicians in anesthesia, internal medicine, otolaryngology, general and plastic surgery, Ob/Gyn, among others will see payments decline, while community physicians in the same specialties are likely to see small increases in total payments.

For more information, contact Denise Dodero (ddodero@aamc.org), Assistant Vice President, Division of Health Care Affairs at 202-828-0493.

Table 1

¹ HCFA Methodology proposed June 5, 1998

² HCFA Methodology proposed June 18, 1997