Revised practice expense proposal expected any day
Some call new numbers garbage-in-garbage-out’
The first of May came and went without HCFA’s promised revision to its controversial practice expense proposal. However, HCFA watchers told Physician’s Payment Update at press time in late May that the revisions should be published by mid-June at the latest.
Washington insiders tell PPU they expect the new formula will be kinder to doctors who practice mostly in office settings, and less generous to those mainly affiliated with hospitals.
"The one thing I have confidence in is there will be a redistribution away from inpatient to outpatient services," notes one health care executive close to the process. "Because variations in payments were so extreme under the January proposal, HCFA’s under tremendous pressure to make the differences not so big this time."
Cuts would strike specialty medicine, surgery
Lloyd D. Loop, MD, Cleveland Clinic’s chief executive officer, estimates reimbursement to the clinic’s cardiology department would immediately drop 14% based on the preliminary numbers HCFA released in January. The revenues of the clinic’s thoracic surgery unit would fall 31%. January’s proposed practice expense rule would reduce the clinic’s total 1998 revenue by $4 million. "The proposed practice cuts would be a major salt, not only on specialty practices and surgery in particular, but also on academic medicine," Loop says.
The issue of practice expense payments in the Medicare Part B formula known as the Resource-Based Relative Value Scale (RBRVS) is one of the most important issues physicians have faced in the last decade. Because the practice expense component makes up 41% of the RBRVS formula (the other two components are physician work at 54% and malpractice costs at 5%), physicians are understandably nervous about HCFA’s revised practice expense numbers.
A few specialists, such as dermatologists and chiropractors, were big winners under the January proposal, with projected Medicare revenue increases of up to 54%. Meanwhile, surgeons took the hardest hits, with some specialists looking at a possible 44% slash in income (see chart above).
Even if the revised numbers are better, opposition to the proposal is expected to continue.
"Sure, we could get another set of numbers which might not hurt as much. But, that doesn’t mean HCFA will have come any closer to capturing the true administrative costs of providing these services," argues Randy Fenniger, co-chair of the Practice Expense Coalition (PEC), a group of 35 physician specialty groups organized to fight the regulation.
PEC contends HCFA’s data are so poor that there is no way any proposal based on them could reflect a physician’s true administrative and overhead expenses realistically. "I don’t see how any corrections to this data could be any more than garbage-in-garbage-out,’" maintains Fenniger. PEC already is lobbying Congress to insert a provision in the final budget reconciliation legislation pushing the rule’s January 1, 1998, implementation date back substantially.
(Editor’s note: PPU will update you via a fax bulletin once the completed revised practice expense proposal becomes public. Don’t forget to send in the form contained in our June issue if we do not have your fax number.)
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