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Thursday, December 13, 2012

Eliminating higher-paying consultation codes leads to Medicare cost increase

Two years ago, Medicare authorities sought to steer more money toward primary care physicians, who have historically been underpaid, while keeping the program's overall expenses level. One of the approaches they took was to eliminate the relatively higher payments for consultations, most often used by specialists, in favor of raising the reimbursement rates for office visits, more commonly used by primary care physicians.

A new study shows the move did increase revenue for primary care doctors in its first year. But, despite the government's goal of budget-neutrality, the change actually led to a 6.5 percent overall increase in outpatient visit costs to the system.

The increased reimbursement rates for office visits obviously contributed to some of that growth, as the volume of patient encounters did not change significantly. But the researchers also found greater use of higher-complexity office visit codes among both specialists and primary care physicians.

The study was published in the Archives of Internal Medicine.

Using Medicare data from 2007 through 2010, the study found spending on all physician encounters increased $10.20 per Medicare beneficiary per quarter after the policy change went into effect in January 2010. The researchers estimated two-thirds of the increase came from the higher office visit fees while the remaining third reflected the increased complexity codes.

Primary care doctors received more than half of the new revenue, reducing the gap between themselves and specialists. However, the researchers stressed that they only considered office encounters and didn't know whether overall Medicare reimbursement levels changed between the two groups.

They also said the increase in complexity may not represent inappropriate "upcoding" but instead reflects the flexibility inherent in medical coding. For example, they said a physician who previously may have billed for a level-3 consultation (40 minutes) may have determined a suitable replacement was a level-4 new patient office visit (45 minutes) and not a level-3 new patient office visit (30 minutes).

The researchers said the study results highlight the dangers of trying to achieve budget savings through fee changes only.

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