APPENDIX E. MEDICARE REIMBURSEMENT TO PHYSICIANS
CONTENTS
Physician Payment Reform
Medicare Fee Schedule
Medicare Volume Performance Standards; Sustainable Growth Rate
and Conversion Factor Updates
Medicare Volume Performance Standards
Sustainable Growth Rate
Conversion Factor Updates
Limits on Beneficiary Liability
Medical Care Outcomes and Effectiveness Research
Impact of Medicare Fee Schedule
Historical Data
Assignment Rate Experience
Participating Physician Program Data
Distribution of Physician Services
References
PHYSICIAN PAYMENT REFORM
The Omnibus Budget Reconciliation Act of 1989 (OBRA 1989)
provided for the implementation, beginning January 1, 1992, of
a new payment system for physicians' services paid for by
Medicare. This fee schedule payment system replaced the
previous reasonable charge payment system. The new system was
enacted in response to two principal concerns. The first was
the rapid escalation in program payments. The second was that
the use of the reasonable charge payment had led, in many
cases, to payments which were not directly related to the
resources used. The Balanced Budget Act of 1997 (BBA 1997) made
several modifications to the fee schedule payment system.
Medicare payments for physicians' services are made under a
fee schedule which is based on a resource-based relative value
scale (RBRVS). Annual updates to the payment amounts are based,
in part, on a comparison of actual physician spending in a base
period compared to an expenditure goal. The expenditure goal in
place prior to fiscal year 1998 was known as the Medicare
volume performance standard (MVPS). Beginning in fiscal year
1998 the MVPS is replaced by the sustainable growth rate (SGR).
Use of an expenditure goal was intended to moderate the rate of
growth in physician expenditures. The law also places limits on
amounts that physicians can bill in excess of Medicare's
approved payment amount.
MEDICARE FEE SCHEDULE
The Secretary of the Department of Health and Human
Services (DHHS) is required to establish a fee schedule before
January 1 of each year that sets payment amounts for all
physicians' services furnished in all fee schedule areas for
the year. The fee schedule amount for a service is equal to the
product of:
--The relative value for the service;
--The geographic adjustment factor (GAF) for the service for
the fee schedule area; and
--The national dollar conversion factor for the year.
Relative value unit
The relative value unit (RVU) for each service, the first
factor used to calculate the fee schedule, has three
components:
--The physician work component reflects physician time and
intensity, including activities before and after
patient contact;
--The practice expense or overhead component includes all
categories of practice expenses (exclusive of
malpractice liability insurance costs). Included are
office rents, employee wages, physician compensation,
and physician fringe benefits; and
--The malpractice expense component reflects costs of
obtaining malpractice insurance.
The proportion that each component represents of the total
RVU varies by service.
The work relative value units incorporated in the initial
fee schedule were based on resource costs. They were developed
after extensive input from the physician community. Refinements
in existing values and establishment of values for new services
have been included in the annual fee schedule update. In
addition, HCFA is required to conduct a review of all values at
least every 5 years. The results of the first review were
incorporated in the values used in 1997.
The practice expense and malpractice expense relative
value units included in the initial fee schedule were based on
historical charges. An analysis by the Physician Payment Review
Commission (PPRC) suggested that practice expense relative
value units for a service were most likely to be overvalued
when they exceeded the work relative value units by a
substantial amount. OBRA 1993 provided for reductions in 1994,
1995, and 1996 in cases where the number of practice expense
relative value units was substantially more than the number of
work relative value units for the service. The Social Security
Act Amendments of 1994 required the Secretary to develop a
methodology for a resource-based system to be implemented in
1998.
BBA 1997 provides for a phase-in of the resource-based
methodology for practice expenses. In 1998, there will be a
reallocation of no more than $390 million in practice expense
relative value units from services whose number of practice
expense relative value units exceed 110 percent of the number
of work relative value units. Not included are services
provided 75 percent of the time in an office setting or
services which would receive an increase under HCFA's proposed
regulations issued June 18, 1997. The amount reduced would be
added to the practice expense relative value units of physician
office procedure codes. A new practice expense methodology will
be phased in over the 1999-2002 period. In 1999, 25 percent of
the practice payment will be based on the new methodology. This
percentage will increase to 50 percent in 2000, 75 percent in
2001, and 100 percent in 2002. The Secretary is also required
to develop new resource-based methodology for practice
expenses. In developing the units, the Secretary is required,
to the maximum extent practicable, to utilize generally
accepted accounting principles. The Secretary is also required
to use actual data on equipment and other key factors. Proposed
rulemaking is to be published by May 1, 1998.
BBA 1997 directs HCFA to develop and implement a resource-
based methodology for malpractice expenses to be implemented by
January 2000.
Geographic adjustment factor
The second factor used in calculation of the fee schedule
is the geographic adjustment factor (GAF) for the fee schedule
area. There are currently 89 fee schedule areas nationwide. A
comprehensive revision of fee schedule payment areas occurred
in 1997, reducing the number of locations from 210 to 89.
The GAF is designed to account for geographic variations in
the costs of practicing medicine and obtaining malpractice
insurance as well as a portion of the difference in physicians'
incomes that is not attributable to these factors.
The GAF is the sum of three indices. Separate geographic
practice cost indices (GPCIs) have been developed for each of
the three components of the RVU, namely a work GPCI, a practice
expense or overhead GPCI, and a malpractice GPCI. In effect, a
separate geographic adjustment is made for each component.
However, as required by law, only one-quarter of the geographic
variation in physician work resource costs is taken into
account in the formula. (Table E-21 at the end of this chapter
shows the GAF values for each of the 89 fee schedule areas
nationwide.)
The three GPCI-adjusted RVU values are summed to produce an
indexed RVU for each locality.
Conversion factor
The conversion factor, which is the third fee schedule
factor, is a dollar multiplier which converts the
geographically adjusted relative value for a service to an
actual payment amount for the service. The law initially
required the establishment of a single conversion factor.
Beginning in 1993, two conversion factors applied--one for
surgical services and one for nonsurgical services. Beginning
in 1994, there were three conversion factors--one for surgical,
one for primary care, and one for nonsurgical services. The
1997 conversion factors are $40.96 for surgical services,
$35.77 for primary care services, and $33.85 for other
nonsurgical services. Thus, the payment for a surgical service
with an adjusted relative value of two is $81.92; the payment
for a primary care service with an adjusted relative value of
two is $71.54; the payment for a nonsurgical service with an
adjusted relative value of two is $67.70. Anesthesiologists are
paid under a separate fee schedule which uses base and time
units. A separate conversion factor ($16.68 in 1997) applies.
BBA 1997 establishes a single conversion factor beginning
in 1998. In 1998, the amount will be the 1997 primary care
conversion factor, updated to 1998 by the average of the three
separate updates that would have occurred in the absence of the
legislation.
Payment formula
The payment for each service is calculated as follows:
Payment = CF x [(RVUwork x
GPCIwork)
+ (RVUpractice expense x
GPCIpractice expense)
+ (RVUmalpractice x
GPCImalpractice)]
Where:
CF = conversion factor;
RVUwork = physician work relative value units
for the service;
GPCIwork = geographic practice cost index value
for physician work in the locality (the value reflects only
one-quarter of the variation in physician work as required by
law);
RVUpractice expense = practice expense or
overhead relative value units for the service;
GPCIpractice expense = geographic practice cost
index value for practice expense or overhead applicable in the
locality;
RVUmalpractice = malpractice relative value
units for the service; and
GPCImalpractice = geographic practice cost index
value for malpractice applicable in the locality.
MEDICARE VOLUME PERFORMANCE STANDARDS; SUSTAINABLE GROWTH RATE AND
CONVERSION FACTOR UPDATES
A key element of the fee schedule is the conversion factor.
One consideration in establishing the annual update in the
conversion factor is whether efforts to stem the annual rate of
growth in physician payments have succeeded. This growth has
been measured by the Medicare volume performance standards
(MVPSs). Beginning in fiscal year 1998, the MVPS is replaced by
the sustainable growth rate (SGR).
Medicare Volume Performance Standards
The law has required the calculation of annual MVPSs, which
are standards for the rate of expenditure growth. The purpose
of these standards has been to provide an incentive for
physicians to get involved in efforts to stem expenditure
increases. The relationship of actual expenditures to the MVPS
has been one factor used in determining the annual update in
the conversion factor.
Implementation of the MVPS provision began in fiscal year
1990. As modified by subsequent legislation, there have been
three separate MVPS rates of increase--one for surgical care,
one for primary care, and one for nonsurgical services.
The law contains a formula for calculating the annual
update in the MVPS. However, Congress may modify the update
that would otherwise apply. The Secretary of DHHS has been
required to make a recommendation to the Congress by April 15
each year. In making the recommendation, the Secretary is to
consider inflation, changes in the number of part B enrollees,
changes in technology, appropriateness of care, and access to
care. The Physician Payment Review Commission (PPRC), a
Congressional advisory body, has been required to review the
Secretary's recommendation and submit its own recommendation by
May 15.
The Congress may establish the standard rates of increase.
If the Congress does not specify the MVPS, however, the rates
of increase are determined based on the default formula. The
default standard is the product of four factors reduced by a
performance standard factor of four percentage points. The four
factors are:
--The Secretary's estimate of the weighted average percentage
increase in physicians' fees for services for the
portions of the calendar years included in the fiscal
year involved;
--The Secretary's estimate of the percentage change from the
previous year in the number of part B enrollees (other
than HMO enrollees);
--The Secretary's estimate of the average annual percentage
growth in volume and intensity of physicians' services
for the preceding 5 fiscal years; and
--The Secretary's estimate of the percentage change in
physician expenditures in the fiscal year (not taken
into account above) which will result from changes in
law or regulations.
The MVPS for fiscal year 1997 is a decrease of 3.7 percent
for surgical services and 0.5 percent for other nonsurgical
services. There is an increase of 4.5 percent for primary care
services (see table E-1).
TABLE E-1.--MEDICARE VOLUME PERFORMANCE STANDARDS, 1990-97
------------------------------------------------------------------------
Primary
Fiscal year Surgical Nonsurgical care All
------------------------------------------------------------------------
1990......................... (\1\) (\1\) (\2\) 9.1
1991......................... 3.3 8.6 (\2\) 7.3
1992......................... 6.5 11.2 (\2\) 10.0
1993......................... 8.4 10.8 (\2\) 10.0
1994......................... 9.1 9.2 10.5 9.4
1995......................... 9.2 4.4 13.8 7.5
1996......................... -0.5 0.6 9.3 1.8
1997......................... -3.7 -0.5 4.5 -0.3
------------------------------------------------------------------------
\1\ Separate performance standards for surgical and nonsurgical services
not required for fiscal year 1990.
\2\ Separate performance standards for primary care services not
required for fiscal years 1990-93.
Source: Federal Register 1996a.
Sustainable Growth Rate
Beginning in fiscal year 1998, the MVPS is replaced by a
cumulative sustainable growth rate. The calculation of the
sustainable growth rate uses the same factors used in the
calculation of the MVPS, except that actual annual growth in
gross domestic product replaces the volume and intensity
factor. Further, there is no performance factor reduction. The
sustainable growth rate will begin affecting conversion factor
updates in 1999. The sustainable growth rate must be published
by August 1 of each year, except that the rate for fiscal year
1998 must be published by November 1, 1997.
Conversion Factor Updates
Annual updates in payments under the fee schedule are made
by updating the dollar conversion factor. The law contains a
formula for calculating the annual updates. However, the
Congress may modify the updates that would otherwise apply.
In April of each year (1991-97), the Secretary of DHHS has
been required to recommend to the Congress the updates in the
conversion factors for the following year. In making the update
recommendations, the Secretary has been required to consider a
number of factors including the percentage change in actual
expenditures in the preceding fiscal year compared to the MVPS
for that year, changes in volume and intensity of services,
beneficiary access to care, and the increase in the Medicare
economic index (MEI). The MEI is a percentage figure which is
revised annually; it has been used in the program to limit
annual increases in recognized fees. The MEI is generally
intended to reflect annual increases in the costs of operating
a medical practice; however, for several years the MEI
percentage was set by the Congress. The PPRC has been required
to review the Secretary's update recommendation and submit its
own recommendation to Congress by May 15 of each year.
The Congress has either specified the updates to the
conversion factor or a default formula, specified in law, has
applied. The default fee update is equal to the Secretary's
estimate of the MEI increased or decreased by the percentage
difference between the increase in actual expenditures and the
MVPS for the second preceding fiscal year. (Thus, the 1997
updates reflect actual fiscal year 1995 experience.) However,
the law specifies a lower limit on the default update. The
maximum downward adjustment in the update has been 5.0
percentage points. There has been no restriction on upward
adjustments to the MEI.
Table E-2 shows the 1992-97 fee schedule updates. This
table shows what the MEI was for each year, the impact of the
MVPS calculation (i.e., the ``performance adjustment''),
legislative modification (if any), and the resulting update
percentage. The table also shows the conversion factors for
each year.
BBA 1997 provides for a single conversion factor beginning
in 1998 and specifies rules for the calculation of the update
in 1998 and subsequent years. In 1998, the amount will be the
1997 primary care conversion factor, updated to 1998 by the
average of the three separate updates that would have occurred
in the absence of the legislation.
Beginning in 1999, the update will effectively be limited
by the increase in the gross domestic product. Specifically,
the update will equal the product of the MEI and the update
adjustment factor. The update adjustment factor will match
spending on physicians services to the cumulative sustainable
growth rate (which is linked to the growth in the gross
domestic product.) By November 1 of each year (beginning in
1998), the Secretary will calculate an update adjustment factor
for the succeeding year. The calculation will be made on the
basis of a comparison of cumulative target spending (based on
cumulative sustainable growth rate calculations) and cumulative
actual spending from the base year (April 1997-March 1998).
Regardless of the result of this calculation, the update can be
no greater than 3 percentage points above nor no less than 7
percentage points below the MEI.
TABLE E-2.--CONVERSION FACTORS: CALCULATION OF UPDATES AND ANNUAL FACTORS, CALENDAR YEARS 1992-97
----------------------------------------------------------------------------------------------------------------
Calculation of update (in percent)
---------------------------------------------
Calendar year Medicare Conversion
economic Performance Legislative Update factor
index adjustment adjustment
----------------------------------------------------------------------------------------------------------------
1992:
All services....................................... 3.2 -0.9 -0.4 1.9 $31.00
1993:
Surgical........................................... 2.7 0.4 ........... 3.1 31.96
Nonsurgical........................................ 2.7 -1.9 ........... 0.8 31.25
1994:
Surgical........................................... 2.3 11.3 -3.6 10.0 35.16
Primary care....................................... 2.3 5.6 0.0 7.9 33.72
Other nonsurgical.................................. 2.3 5.6 -2.6 5.3 32.90
1995:
Surgical........................................... 2.1 12.8 -2.7 12.2 39.45
Primary care....................................... 2.1 5.8 0.0 7.9 36.38
Other nonsurgical.................................. 2.1 5.8 -2.7 5.2 34.62
1996:
Surgical........................................... 2.0 1.8 ........... 3.8 40.80
Primary care....................................... 2.0 -4.3 ........... -2.3 35.42
Other nonsurgical.................................. 2.0 -1.6 ........... 0.4 34.63
1997:
Surgical........................................... 2.0 -0.1 ........... 1.9 40.96
Primary care....................................... 2.0 0.5 ........... 2.5 35.77
Other nonsurgical.................................. 2.0 -2.8 ........... -0.8 33.85
----------------------------------------------------------------------------------------------------------------
Source: Federal Register 1996a.
LIMITS ON BENEFICIARY LIABILITY
Medicare pays 80 percent of the fee schedule amount after
the beneficiary has met the $100 deductible for the year. The
beneficiary is responsible for the remaining 20 percent, known
as coinsurance. If a physician does not accept assignment on a
claim, the beneficiary may be liable for additional charges
known as balance billing charges. However, the law places
certain limits on these balance billing charges.
Assignment/participation
A physician is able to choose whether to accept assignment
on a claim paid under the fee schedule. In the case of an
assigned claim, the physician bills the program directly and is
paid an amount equal to 80 percent of the fee schedule amount
(less any unmet deductible). The physician may not charge the
beneficiary more than the applicable deductible and coinsurance
amounts. In the case of nonassigned claims, the physician still
bills the program directly; however, Medicare payment is made
to the beneficiary. In addition to the deductible and
coinsurance amounts, the beneficiary is liable for the
difference between the fee schedule amount and the physician's
actual charge, subject to certain limits. This is known as the
balance billed amount.
A physician may become a ``participating physician'' by
voluntarily entering into an agreement with the Secretary of
DHHS to accept assignment on all claims for the forthcoming
year. Medicare patients of these physicians never face balance
billing charges.
The law includes a number of incentives for physicians to
become participating physicians, chief of which is higher
recognized fee schedule amounts. The fee schedule amount for a
nonparticipating physician is only 95 percent of the recognized
amount for a participating physician.
The law specifies that physicians are required to accept
assignment on all claims for persons who are dually eligible
for Medicare and Medicaid. This includes ``qualified Medicare
beneficiaries'' (QMBs); these are persons with incomes below
poverty for whom Medicaid is required to pay Medicare premiums
and cost-sharing charges.
Balance billing limits
Nonparticipating physicians may charge beneficiaries more
than the fee schedule amount on nonassigned claims; these
balance billing charges are subject to certain limits. The
limit is 115 percent of the fee schedule amount for
nonparticipating physicians. The nonparticipating physicians
fee schedule payment level is 95 percent of the participating
physicians level. Thus, the balance billing limit is only 9.25
percent higher than the level recognized for participating
physicians (95 percent 115 percent).
MEDICAL CARE OUTCOMES AND EFFECTIVENESS RESEARCH
OBRA 1989 created a new agency, the Agency for Health Care
Policy and Research, which replaced the then-existing National
Center for Health Services Research in the Public Health
Service. The mission of the new agency was to enhance the
quality, appropriateness and effectiveness of health care
services and access to such services. These goals were to be
accomplished by establishing a broad base of scientific
research and promoting improvements in the clinical practice of
medicine and the organization, financing, and delivery of
health care services.
Specifically, the agency was directed to conduct and
support research, demonstration projects, evaluations,
training, guideline development, and the dissemination of
information on health care services and delivery systems,
including activities on: (1) the effectiveness, efficiency, and
quality of health care services; (2) the outcomes of health
care services and procedures; (3) clinical practice, including
primary care and practice-oriented research; (4) health care
technologies, facilities, and equipment; (5) health care costs,
productivity, and market forces; (6) health promotion and
disease prevention; (7) health statistics and epidemiology; and
(8) medical liability.
IMPACT OF MEDICARE FEE SCHEDULE
The Medicare fee schedule was designed to remove many of
the inequities of the previous payment system by shifting
payment away from tests and procedures toward evaluation and
management services. Because the fee schedule was intended to
be implemented in a budget-neutral fashion, total outlays under
the new system were expected to match the outlays that would
have occurred under the previous payment system. In general,
under the new payment system, primary care physicians were
expected to receive higher payments per service, and specialty
physicians were expected to receive lower payments per service.
Payment levels in rural areas were also expected to increase
relative to metropolitan areas.
The overall payment level under the Medicare fee schedule
is established through the conversion factor. In effect, the
conversion factor translates the relative value units for
individual services into actual dollar payments. Increases or
decreases in the overall level of payments are accomplished by
adjusting the level of the conversion factor.
Using data from 1991, 1992, and 1993, PPRC examined the
initial impact of the Medicare fee schedule on physicians. From
1991 to 1993, physicians' payments per service declined by 4
percent. Surgical specialties had about an 8-percent reduction
in payment per service compared with the 2-percent increase for
medical specialties. Specialties that predominantly provide
evaluation and management services fared better. Payments to
general and family practitioners increased by 17 percent over
the 2-year period, while those to internists rose by 2 percent.
Pathologists and thoracic surgeons had the largest reduction of
16 percent, followed by gastroenterologists, radiologists, and
cardiologists with reductions ranging from 10 to 12 percent.
The total Medicare payment a physician receives depends not
only on the payment per service but also on changes in the
number and intensity of services billed. Although physicians
had about a 4-percent reduction in payment overall from 1991 to
1993, a 6-percent increase in the number and intensity of
services per physician led to about a 4-percent increase in
total Medicare payment per physician over the 2-year period.
PPRC analyzed Medicare claims data from the first 6 months
of 1995 and 1996 to measure changes in physician payment
policy. In 1996, Medicare's physician payment rates decreased,
on average, about 2 percent from 1995 levels (table E-3).
Payment rates were influenced the most by the low conversion
factor updates for 1996 and the completion of the transition to
Medicare fee schedule payments. Changes in relative value units
(RVUs) had a lesser effect, and changes in the geographic
adjustment factors had a negligible effect.
TABLE E-3.--EFFECT OF POLICY CHANGES ON FEE SCHEDULE PAYMENTS, 1995-96
----------------------------------------------------------------------------------------------------------------
Total Percentage change due to
change ---------------------------------------------
in
Type of service, location, and specialty Medicare Relative Geographic
payment Conversion value adjustment Transition
per factor unit factor to fee
service updates changes changes schedule
----------------------------------------------------------------------------------------------------------------
Type of service:
Evaluation and management
Primary care.................................... 0.6 -2.3 1.8 0.0 1.1
Other........................................... 2.0 0.4 0.1 0.0 1.5
Surgical............................................ -4.9 3.8 -1.6 0.0 -7.1
Other nonsurgical................................... -3.4 0.4 1.0 0.1 -4.9
Location:
Metropolitan areas
Greater than 1 million......................... -2.0 0.6 0.5 0.2 -3.3
Less than 1 million............................. -2.2 0.7 0.2 0.0 -3.1
Rural counties
Greater than 25,000............................ -1.9 0.6 0.1 -0.3 -2.3
Less than 25,000................................ -0.5 0.0 0.2 -0.6 -0.1
Specialty:
Primary care
Family/general practice........................ 0.2 -1.2 0.3 -0.1 1.2
Internal medicine............................... -0.4 -0.8 0.5 0.1 -0.2
Other medical
Cardiology..................................... -6.5 0.1 -1.0 0.0 -5.6
Gastroenterology................................ -4.1 0.2 0.0 0.1 -4.4
Other medical................................... 2.7 -0.1 3.9 0.1 -1.2
Surgical
Dermatology.................................... -0.2 2.3 0.0 0.1 -2.6
General surgery................................. -1.5 2.5 -0.1 0.0 -3.9
Ophthalmology................................... -9.6 2.3 -3.4 0.0 -8.5
Orthopedic surgery.............................. -2.6 2.5 -0.5 0.0 -4.6
Thoracic surgery............................... -2.6 3.3 -0.2 0.0 -5.7
Urology......................................... 0.7 2.0 0.4 0.0 -1.7
Other surgical.................................. -2.4 1.9 -0.6 0.0 -3.7
Other
Pathology...................................... -6.2 0.4 -0.1 0.1 -6.6
Radiology....................................... -3.8 0.4 0.0 0.0 -4.2
Other.......................................... -0.2 0.6 2.9 0.0 -3.7
-------------------------------------------------------
All services................................ -2.1 0.6 0.3 0.1 -3.1
----------------------------------------------------------------------------------------------------------------
Note.--Changes due to the transition to fee schedule based payments are calculated as the difference between
total payment changes and the sum of changes attributable to relative value changes, geographic adjustment
factor changes, and conversion factor updates.
Source: Physician Payment Review Commission analysis of 1995-96 Medicare claims, 5 percent sample of
beneficiaries.
In accordance with the volume performance standard system,
conversion factor updates varied by type of service. For 1996,
the updates were -2.3 percent for primary care services, 3.8
percent for surgical services, and 0.4 percent for other
services. The average conversion factor update for all
services, weighted by total payments in each service category,
was 0.6 percent.
The variation in conversion factor updates led to
differences in average updates among specialties and geographic
areas, reflecting differences in the mix of services provided.
The average update ranged from -1.2 percent for family/general
practice to 3.3 percent for thoracic surgery. For metropolitan
areas and rural counties with populations of more than 25,000,
the average updates were near the national average, 0.6-0.7
percent. For rural counties with populations less than 25,000,
the average conversion factor was essentially unchanged from
1995 to 1996 because of the greater share of primary care
services provided in those counties.
Relative value unit changes implemented in 1996 included
reductions in practice expense RVUs for some procedures, as
required by the Omnibus Budget Reconciliation Act of 1993, and
refinement of work RVUs for some procedures. The changes
ranged, on average, from -1.6 percent for surgical services to
1.8 percent for primary care.
Geographic adjustment factor (GAF) changes reflected the
use of more current price data and technical improvements in
calculating the payment adjustments. The GAF changes, which
were intended to be budget neutral, averaged less than 0.1
percent.
Effects of the final transition to the fee schedule varied
by type of service. Payment for primary care evaluation and
management (EM) services increased 1.1 percent, while payment
for other EM services rose 1.5 percent. The transition caused
payment reductions for all other types of services, including
-7.1 percent for surgical services and -4.9 percent for
nonsurgical services.
HISTORICAL DATA
Assignment Rate Experience
The total number of assigned claims as a percentage of
total claims received by Medicare carriers for physicians and
other medical services is known as the total assignment rate.
Initially, the net assignment rate was computed in the same
manner except that it omitted hospital-based physicians and
group-practice prepayment plans which were considered assigned
by definition (this distinction is no longer made). The net
assignment rate declined until the mid-1970s when the rate
leveled off at about 50 percent. Since 1985, the rate has
increased significantly, rising to 95.6 percent in 1996. This
increase reflects both the impact of the participating
physician program as well as the requirement that laboratory
services must be paid on an assigned basis. Table E-4 shows the
net assignment rates for fiscal years 1969-96.
The statistics included in table E-4 are programwide data.
Assignment rates vary geographically. For example, the
assignment rate (taken as a percent of dollars) for physician
services in fiscal year 1996 ranged from a low of 73.5 percent
in South Dakota to a high of 99.9 percent in Rhode Island. The
national average assignment rate for physicians services during
this period was 97.8 percent (see table E-5).
TABLE E-4.--NET ASSIGNMENT RATES, \1\ 1969-96
[In percent]
------------------------------------------------------------------------
Covered
Fiscal year Claims charges
------------------------------------------------------------------------
1969.............................................. 61.0 NA
1970.............................................. 61.2 NA
1971.............................................. 60.1 NA
1972.............................................. 56.4 NA
1973.............................................. 53.4 49.0
1974.............................................. 52.2 47.8
1975.............................................. 51.9 47.7
1976.............................................. 51.0 47.8
1977.............................................. 50.5 47.9
1978.............................................. 50.6 49.3
1979.............................................. 51.1 50.4
1980.............................................. 51.4 51.3
1981.............................................. 52.2 52.9
1982.............................................. 52.8 53.8
1983.............................................. 53.5 55.3
1984.............................................. 56.4 57.7
1985.............................................. 67.7 67.4
1986.............................................. 68.0 69.5
1987.............................................. 71.7 73.7
1988.............................................. 76.3 79.4
1989.............................................. 79.3 82.6
1990.............................................. 80.9 84.8
1991.............................................. 82.5 87.6
1992.............................................. 85.5 90.8
1993.............................................. 89.2 94.0
1994.............................................. 92.1 96.0
1995.............................................. 94.2 97.1
1996.............................................. 95.6 97.9
------------------------------------------------------------------------
\1\ Both measures of assignment exclude claims from hospital-based
physicians and group-practice prepayment plans that are considered
assigned by definition.
NA--Not available.
Source: Health Care Financing Administration, Bureau of Program
Operations.
TABLE E-5.--PHYSICIAN ASSIGNMENT RATES AS PERCENT OF ALLOWED CHARGES BY STATE, SELECTED YEARS 1985-96 \1\
[In percent]
----------------------------------------------------------------------------------------------------------------
Fiscal year
Census division/State -------------------------------------------------------
1985 1990 1991 1992 1993 1994 1995 1996
----------------------------------------------------------------------------------------------------------------
National................................................ 65.5 83.0 86.1 89.4 93.2 95.6 96.8 97.8
New England:
Maine............................................... 81.5 92.4 94.4 96.7 98.0 98.6 99.1 99.4
New Hampshire....................................... 56.5 69.9 80.8 89.4 93.9 95.6 96.9 97.9
Vermont............................................. 64.3 94.7 95.9 97.8 98.6 99.0 99.1 99.3
Massachusetts \2\................................... 93.7 99.5 99.5 99.6 99.7 99.7 99.8 99.8
Rhode Island........................................ 94.0 98.7 99.7 99.7 99.8 99.8 99.9 99.9
Connecticut......................................... 57.6 84.7 87.7 91.7 94.7 96.6 97.6 98.1
Middle Atlantic:
New York............................................ 70.3 81.9 84.4 87.7 90.7 93.2 95.6 97.0
New Jersey.......................................... 62.3 73.0 76.3 80.5 85.4 89.7 92.6 94.9
Pennsylvania........................................ 88.1 95.7 98.5 99.1 99.4 99.6 99.6 99.7
East North Central:
Ohio................................................ 50.8 82.6 87.3 92.5 97.7 99.5 99.7 99.8
Indiana............................................. 49.6 77.2 81.5 85.7 92.9 95.4 96.5 97.6
Illinois............................................ 51.7 75.9 78.8 83.2 89.2 93.6 98.6 96.9
Michigan............................................ 88.2 94.5 94.4 95.9 97.8 98.6 99.0 99.2
Wisconsin........................................... 51.7 68.2 71.7 78.2 86.8 91.2 94.2 96.3
West North Central:
Minnesota........................................... 30.6 47.6 52.3 57.1 67.1 77.4 86.2 91.7
Iowa................................................ 46.9 69.8 73.4 78.8 85.6 89.9 99.2 96.3
Missouri \3\........................................ 50.1 74.9 78.5 83.7 91.6 95.1 96.7 97.7
North Dakota........................................ 30.5 55.0 67.1 72.1 74.9 87.6 92.9 96.7
South Dakota........................................ 18.7 39.2 40.2 43.3 50.2 57.3 67.0 73.5
Nebraska............................................ 47.3 64.9 70.3 76.8 83.8 87.7 89.6 91.6
Kansas \4\.......................................... 72.7 88.8 91.9 94.5 96.2 96.8 97.1 98.5
South Atlantic:
Delaware............................................ 81.8 90.5 92.9 95.2 96.8 97.5 97.8 98.6
Maryland \5\........................................ 81.6 91.4 92.8 94.3 96.7 97.5 98.1 98.6
District of Columbia \6\............................ 78.1 87.5 89.4 92.1 94.1 95.7 96.6 97.3
Virginia \7\........................................ 66.4 87.3 89.6 92.5 95.7 97.4 98.4 98.9
West Virginia....................................... 66.7 93.2 95.5 97.2 98.4 98.8 99.1 99.4
North Carolina...................................... 60.3 80.8 83.9 88.8 93.7 95.5 96.7 97.6
South Carolina...................................... 64.9 87.1 88.9 91.6 94.4 95.9 97.0 98.0
Georgia............................................. 63.9 83.5 96.6 90.3 94.0 96.3 97.4 98.3
Florida............................................. 62.2 84.1 87.6 91.0 95.0 97.3 98.4 98.8
East South Central:
Kentucky............................................ 50.3 84.8 88.8 91.9 95.5 97.1 97.9 98.6
Tennessee........................................... 55.6 84.0 89.5 93.1 96.3 97.5 98.3 98.8
Alabama............................................. 74.6 92.3 94.9 96.6 98.0 98.6 98.9 99.2
Mississippi......................................... 63.5 88.1 90.6 93.1 95.6 97.1 97.8 98.5
West South Central:
Arkansas............................................ 72.6 92.0 93.7 95.4 96.6 97.9 98.7 99.0
Louisiana........................................... 51.0 88.0 91.0 93.8 95.2 96.9 98.1 98.8
Oklahoma............................................ 39.0 68.2 72.8 77.8 85.0 90.6 94.2 96.7
Texas............................................... 63.0 79.9 83.0 87.4 91.6 94.7 96.6 97.7
Mountain:
Montana............................................. 42.6 53.0 54.8 61.3 72.7 80.6 86.3 95.2
Idaho............................................... 25.2 36.1 40.2 40.1 54.1 64.5 71.7 77.9
Wyoming............................................. 33.8 43.9 48.9 57.5 69.0 78.2 81.8 86.0
Colorado............................................ 56.0 70.4 74.1 79.7 86.8 91.4 93.5 95.5
New Mexico.......................................... 58.3 76.1 80.1 84.9 91.5 94.0 95.2 96.0
Arizona............................................. 52.8 76.2 80.3 84.4 89.6 91.7 92.8 93.4
Utah................................................ 63.1 80.4 83.1 88.4 92.8 95.2 96.6 98.0
Nevada.............................................. 81.6 96.0 97.4 98.4 99.0 99.2 99.4 99.5
Pacific:
Washington.......................................... 45.5 54.8 60.8 69.2 74.3 87.5 93.4 95.7
Oregon.............................................. 38.7 59.9 63.2 69.3 82.1 88.0 92.3 94.7
California.......................................... 71.3 84.4 87.4 90.2 93.8 96.0 97.3 98.0
Alaska.............................................. 54.4 79.6 83.2 89.1 93.9 95.4 96.2 97.0
Hawaii.............................................. 61.2 82.9 85.8 93.1 96.1 92.8 98.7 99.0
----------------------------------------------------------------------------------------------------------------
\1\ Rates reflect covered charges for physician claims processed during the period.
\2\ Massachusetts enacted a Medicare mandatory assignment provision, effective April 1986. The fact that the
assignment rates shown here are not 100 percent may be explained by the inclusion in the data base of billings
by practictioners other than allopathic and osteopathic physicians, which are included in the Medicare
statutory definition of ``physician.''
\3\ Starting with fiscal year 1993, includes data for all counties in Missouri plus two counties on the State
border located in Kansas.
\4\ Starting with fiscal year 1993, includes data for all counties in Kansas excluding two counties on the State
border.
\5\ Starting with fiscal year 1993, includes data for all counties in Maryland excluding two counties on the
State border.
\6\ Starting with fiscal year 1993, includes data for the District of Columbia plus two counties in Maryland
located on the State border plus a few counties and cities located in Virginia, near the State border.
\7\ Starting with fiscal year 1993, includes data for all counties in Virginia excluding a few counties and
cities near the State border.
Source: Health Care Financing Administration, Bureau of Program Operations.
Participating Physician Program Data
Physician participation rates have increased significantly
since the inception of the program (see tables E-6 and E-7).
For the calendar year 1996 participation period, the physician
participation rate (including limited licensed practitioners)
had risen to 77.5 percent accounting for 94.3 percent of
allowed charges for physician services during the period. The
participation rate rose to 80.2 percent in 1997. Table E-7
shows the participation rates by specialty. Table E-8 shows the
percentage of participating physicians and limited licensed
practitioners as a percentage of total physicians and limited
licensed practitioners for each State.
TABLE E-6.--MEDICARE PHYSICIAN PARTICIPATION RATES: PERCENT OF
PHYSICIANS AND LIMITED LICENSED PRACTITIONERS WITH AGREEMENTS AND THEIR
SHARE OF ALLOWED CHARGES, 1984-97
------------------------------------------------------------------------
Participating
Percent of physicians'
physicians covered
Participation period signing charges as a
agreements percent of
total \1\
------------------------------------------------------------------------
October 1984-September 1985............. 30.4 36.0
October 1985-April 1986................. 28.4 36.3
April 1986-December 1986 \2\............ 28.3 38.7
January 1987-March 1988................. 30.6 48.1
April 1988-December 1988................ 37.3 57.9
January 1989-March 1990................. 40.2 62.0
April 1990-December 1990................ 45.5 67.2
January 1991-December 1991.............. 47.6 72.3
January 1992-December 1992.............. 52.2 78.8
January 1993-December 1993.............. 59.8 85.5
January 1994-December 1994.............. 64.8 89.4
January 1995-December 1995.............. 72.3 92.6
January 1996-December 1996.............. 77.5 94.3
January 1997-December 1997.............. 80.2 NA
------------------------------------------------------------------------
\1\ Rates reflect covered charges for physician services processed
during period.
\2\ The actual participation period was May through December of 1986,
and participation agreements were in effect for that time. However,
charge data are generally collected by quarter; thus, the data for the
last three quarters of 1986 are used as a proxy for the participation
period.
NA--Not available.
Source: Health Care Financing Administration, Bureau of Program
Operations.
Table E-9 shows the allowed charges of participating
physicans as a percent of total allowed charges, by State, for
several participation periods. This percentage increased
substantially, rising from 36 percent in the October 1984-
September 1985 period to 94.3 percent in the calendar 1996
participation period.
TABLE E-7.--PARTICIPATION RATES AS PERCENTAGE OF PHYSICIANS BY SPECIALTY, FOR SELECTED PARTICIPATION PERIODS, 1985-97
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oct. 1985- Jan. 1991- Jan. 1992- Jan. 1993- Jan. 1994- Jan. 1995- Jan. 1996- Jan. 1997-
Specialty Apr. 1986 Dec. 1991 Dec. 1992 Dec. 1993 Dec. 1994 Dec. 1995 Dec. 1996 Dec. 1997
--------------------------------------------------------------------------------------------------------------------------------------------------------
Physicians (M.D.s and D.O.s):
General practice.................................... 27.3 44.0 48.0 55.1 59.1 59.9 66.3 69.2
General surgery..................................... 33.9 60.5 66.3 73.8 77.6 80.2 85.8 87.8
Otology, laryngology, rhinology..................... 24.6 49.6 57.0 66.2 72.2 77.1 82.6 85.8
Anesthesiology...................................... 21.1 36.5 49.3 64.6 71.5 73.9 81.0 83.5
Cardiovascular disease.............................. 35.6 65.4 72.0 78.7 82.5 81.9 88.3 90.2
Dermatology......................................... 34.0 57.0 61.6 69.8 75.8 79.3 83.6 85.4
Family practice..................................... 25.5 50.8 57.7 66.1 71.3 74.5 81.4 84.0
Internal medicine................................... 32.5 52.6 57.8 66.2 71.0 73.8 79.8 82.2
Neurology........................................... 34.8 56.1 63.8 71.8 76.4 78.9 84.1 85.8
Obstetrics-gynecology............................... 29.1 52.6 58.0 65.7 69.9 72.5 77.3 79.5
Ophthalmology....................................... 27.3 60.0 66.1 73.2 78.3 81.2 86.2 87.9
Orthopedic surgery.................................. 29.0 58.4 65.5 74.9 79.2 82.6 86.8 88.7
Pathology........................................... 39.6 59.2 65.8 73.3 76.8 78.9 83.1 85.0
Psychiatry.......................................... 30.0 44.1 48.8 53.5 57.8 58.7 64.6 67.6
Radiology........................................... 41.3 62.0 68.2 74.7 78.6 82.8 84.9 87.0
Urology............................................. 27.8 53.6 61.7 71.8 78.6 83.0 87.3 89.3
Nephrology.......................................... 50.8 71.7 76.3 82.4 84.3 87.0 90.0 90.6
Clinic or other group practice--not GPPP............ 33.8 73.9 77.0 75.5 80.5 79.4 84.5 87.8
Limited license practitioners (LLP):
Chiropractor........................................ 25.4 28.6 31.4 35.6 39.8 42.6 47.3 51.0
Podiatry-surgical chiropody......................... 38.2 59.6 64.2 70.9 75.3 79.2 83.3 86.0
Optometrist......................................... 44.0 56.9 59.0 62.7 65.6 66.9 70.3 72.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration.
TABLE E-8.--PHYSICIAN AND LIMITED LICENSED PRACTITIONER PARTICIPATION RATES AS PERCENTAGE OF PHYSICIANS AND LIMITED LICENSED PRACTITIONERS, BY STATE,
FOR SELECTED PARTICIPATION PERIODS, 1985-97
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oct. 1985- Jan. 1991- Jan. 1992- Jan. 1993- Jan. 1994- Jan. 1995- Jan. 1996- Jan. 1997-
State Apr. 1986 Dec. 1991 Dec. 1992 Dec. 1993 Oct. 1994 Dec. 1995 Dec. 1996 Dec. 1997
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama......................................................... 58.2 82.7 83.4 85.1 87.2 90.5 91.8 93.5
Alaska.......................................................... 10.4 53.8 55.1 60.4 66.3 77.1 73.5 79.0
Arizona......................................................... 15.4 61.3 64.5 76.2 82.6 87.1 85.2 86.6
Arkansas........................................................ 45.2 59.9 57.8 62.1 64.4 74.8 77.2 78.9
California...................................................... 30.0 60.8 62.6 65.9 69.0 74.5 80.5 80.9
Colorado........................................................ 28.1 35.3 48.0 55.7 58.5 65.2 79.5 81.4
Connecticut..................................................... 22.2 29.3 40.8 48.1 55.4 57.8 61.8 86.4
Delaware........................................................ 23.9 43.9 51.9 57.4 60.0 68.0 72.2 68.6
District of Columbia............................................ 30.5 39.8 45.9 50.6 52.8 63.0 65.3 68.6
Florida......................................................... 25.7 36.5 41.5 55.6 62.2 68.0 70.9 73.9
Georgia......................................................... 33.1 53.6 57.2 74.9 82.7 86.3 87.2 88.6
Hawaii.......................................................... 20.6 57.3 64.1 75.9 80.4 82.8 83.6 84.0
Idaho........................................................... 11.0 19.5 22.9 37.1 49.7 54.7 60.1 67.6
Illinois........................................................ 23.1 46.9 50.8 57.6 61.8 73.3 75.6 83.3
Indiana......................................................... 18.2 45.1 49.3 55.8 61.3 72.8 75.7 76.8
Iowa............................................................ 29.7 51.9 58.8 61.8 63.2 81.1 83.6 88.5
Kansas.......................................................... 45.4 62.6 70.3 73.2 78.7 84.4 91.1 91.8
Kentucky........................................................ 24.3 59.5 64.0 73.6 69.1 83.4 85.8 88.7
Louisiana....................................................... 18.8 42.9 44.6 44.0 46.7 57.4 61.0 64.6
Maine........................................................... 35.4 50.3 51.6 52.0 53.6 68.9 72.2 79.9
Maryland........................................................ 30.4 45.3 58.7 72.5 77.3 88.1 89.9 89.6
Massachusetts................................................... 48.1 50.8 50.0 50.2 48.9 64.7 74.9 77.2
Michigan........................................................ 44.0 53.7 51.7 58.1 62.1 75.3 80.2 82.6
Minnesota....................................................... 18.5 29.3 34.4 44.4 51.3 58.6 70.6 77.3
Mississippi..................................................... 19.1 42.7 47.9 53.6 53.8 59.4 77.3 79.3
Missouri........................................................ 35.2 49.0 51.8 67.5 81.8 87.6 86.8 88.1
Montana......................................................... 24.3 24.8 23.7 54.7 58.7 70.1 77.4 78.7
Nebraska........................................................ 20.0 56.5 61.1 70.6 75.9 82.5 86.3 87.2
Nevada.......................................................... 21.7 72.9 75.4 84.9 87.9 91.2 90.8 92.2
New Hampshire................................................... 26.9 32.7 38.5 43.0 48.0 60.4 77.0 79.7
New Jersey...................................................... 18.0 29.6 36.5 42.6 45.9 54.9 60.6 62.8
New Mexico...................................................... 17.7 49.7 53.6 66.8 74.2 78.1 80.7 81.7
New York........................................................ 20.8 34.6 36.9 40.7 46.2 59.2 64.2 70.0
North Carolina.................................................. 39.1 58.1 68.2 72.8 76.5 77.6 81.0 84.6
North Dakota.................................................... 10.9 43.9 45.8 55.0 77.4 81.8 92.2 93.2
Ohio............................................................ 21.7 52.5 57.3 76.6 83.3 90.5 91.8 92.7
Oklahoma........................................................ 13.8 39.0 44.4 53.9 64.9 72.3 76.1 84.0
Oregon.......................................................... 18.5 46.7 51.7 59.2 66.5 79.7 82.1 87.6
Pennsylvania.................................................... 50.8 45.9 53.0 59.7 61.1 67.3 69.3 72.0
Rhode Island.................................................... 46.7 67.8 70.3 80.9 82.2 80.9 66.8 68.4
South Carolina.................................................. 17.9 57.9 63.0 67.3 70.2 76.1 82.7 85.5
South Dakota.................................................... 8.0 20.6 23.7 31.6 41.2 51.7 71.4 79.3
Tennessee....................................................... 21.1 63.7 67.6 70.5 76.9 80.6 83.1 87.5
Texas........................................................... 19.7 38.9 52.9 61.3 68.6 76.9 80.3 82.1
Utah............................................................ 29.3 65.6 69.5 80.3 82.0 85.9 86.8 90.2
Vermont......................................................... 41.5 45.4 54.2 56.5 58.8 68.8 76.1 78.6
Virginia........................................................ 29.6 48.1 49.7 52.2 52.9 55.6 84.3 85.7
Washington...................................................... 23.6 46.1 53.1 64.7 73.9 76.2 86.4 89.9
West Virginia................................................... 22.9 66.3 68.4 75.9 81.9 87.2 89.3 90.8
Wisconsin....................................................... 31.0 46.8 55.5 66.8 73.7 81.2 83.9 85.2
Wyoming......................................................... 18.3 39.1 50.2 53.3 63.0 66.4 81.2 83.3
---------------------------------------------------------------------------------------
National.................................................. 28.4 47.6 52.2 59.8 64.8 72.3 77.5 80.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, Bureau of Program Operations.
TABLE E-9.--ALLOWED CHARGES OF PARTICIPATING PHYSICIANS AS A PERCENT OF TOTAL ALLOWED CHARGES BY STATE, FOR SELECTED PARTICIPATION PERIODS, 1984-96 \1\
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oct. 1984- Jan. Apr. Jan. Jan 1992- Jan. Jan. Jan. Jan.
Census division/State Sept. 1985 1989-Mar. 1990-Dec. 1991-Dec. Dec. 1992 1993-Dec. 1994-Dec. 1995-Dec. 1996-Dec.
1990 1990 1991 1993 1994 1995 1996
--------------------------------------------------------------------------------------------------------------------------------------------------------
National............................................ 36.0 62.0 67.2 72.3 78.8 85.5 89.4 92.6 94.3
New England:
Maine........................................... 50.9 79.4 80.5 84.2 89.9 92.4 93.6 96.2 97.4
New Hampshire.................................. 40.1 42.8 46.2 68.3 80.7 88.1 90.8 93.2 94.8
Vermont........................................ 37.3 81.4 85.9 90.2 93.4 94.8 95.6 96.9 97.9
Massachusetts.................................. 70.7 95.4 95.0 96.7 96.3 95.9 96.4 97.4 97.9
Rhode Island................................... 68.7 88.8 95.2 97.6 98.5 98.9 99.1 99.4 99.5
Connecticut.................................... 30.7 65.9 67.9 76.2 82.4 87.9 92.2 94.1 95.1
Middle Atlantic:
New York....................................... 31.5 51.7 58.0 63.7 72.2 77.7 82.5 87.5 89.9
New Jersey..................................... 21.5 42.3 49.6 55.2 61.8 72.6 80.1 84.6 89.8
Pennsylvania................................... 71.4 81.6 87.9 92.3 95.4 98.0 98.6 98.7 99.0
East North Central:
Ohio............................................ 41.5 61.9 70.9 79.1 86.3 94.6 97.0 97.8 97.8
Indiana........................................ 18.9 60.6 65.2 70.2 80.9 89.1 92.4 94.0 95.5
Illinois....................................... 29.4 58.1 61.8 66.1 72.2 82.2 87.9 90.7 93.0
Michigan....................................... 55.4 85.6 86.0 86.5 92.0 95.1 96.5 97.6 97.9
Wisconsin...................................... 31.3 42.7 48.9 45.6 61.5 76.9 84.0 91.1 93.4
West North Central:
Minnesota...................................... 9.9 20.2 25.4 28.6 35.5 49.5 68.3 80.5 81.9
Iowa........................................... 28.5 54.2 57.8 61.9 71.0 80.8 85.2 90.4 95.0
Missouri \2\................................... 26.7 41.8 40.1 40.4 45.3 67.7 86.9 93.4 94.5
North Dakota................................... 6.9 32.3 45.5 53.2 61.2 65.8 68.1 89.3 96.3
South Dakota................................... 3.2 19.5 21.2 21.1 24.6 36.0 42.6 59.2 66.4
Nebraska....................................... 30.5 51.7 54.8 60.3 69.7 79.8 83.8 86.2 88.8
Kansas \3\..................................... 48.0 82.5 82.3 86.8 91.3 94.6 94.8 95.3 98.0
South Atlantic:
Delaware....................................... 57.0 70.8 76.6 81.7 87.2 93.5 94.6 95.3 96.7
Maryland \4\................................... 57.8 80.4 83.3 85.6 86.4 87.1 87.4 92.9 94.3
District of Columbia \5\....................... 60.3 73.9 76.8 80.8 85.4 90.1 92.4 93.8 94.9
Virginia \6\................................... 31.0 69.5 71.2 78.4 84.1 90.9 94.1 96.3 97.4
West Virginia.................................. 34.5 77.5 80.6 85.2 90.0 93.4 95.3 96.3 96.0
North Carolina................................. 34.4 55.2 63.9 68.3 82.4 87.1 90.7 92.7 94.7
South Carolina................................. 29.9 68.5 67.6 71.6 79.3 86.6 90.4 62.7 95.5
Georgia........................................ 29.3 50.7 65.9 74.9 82.8 81.6 90.9 94.8 95.8
Florida........................................ 30.0 61.6 68.8 74.9 81.8 89.0 90.1 94.7 95.8
East South Central:
Kentucky....................................... 22.3 64.3 72.6 76.9 84.3 90.7 93.4 94.6 95.5
Tennessee...................................... 25.1 57.4 68.5 76.8 86.8 91.8 94.3 95.6 96.6
Alabama........................................ 42.5 81.3 84.9 88.5 91.7 94.9 96.2 97.0 97.7
Mississippi.................................... 14.3 65.3 68.3 73.9 82.1 88.6 91.2 92.8 94.3
West South Central:
Arkansas....................................... 47.9 81.0 84.5 86.5 90.0 93.4 95.2 96.4 97.4
Louisiana...................................... 16.2 71.0 76.7 81.2 86.6 89.4 91.3 92.2 93.6
Oklahoma....................................... 16.6 39.1 50.0 57.7 62.8 74.0 83.8 91.4 93.8
Texas.......................................... 26.2 52.5 56.9 63.6 72.6 81.5 85.9 90.6 92.5
Mountain:
Montana........................................ 25.6 29.9 29.7 34.1 42.7 58.9 67.4 83.1 91.8
Idaho.......................................... 8.6 13.2 17.5 21.1 23.5 41.2 54.0 61.6 69.7
Wyoming........................................ 15.7 19.7 25.8 31.9 44.1 61.0 72.1 75.6 81.0
Colorado....................................... 23.5 47.7 50.5 55.9 63.5 76.4 82.6 86.1 90.3
New Mexico..................................... 34.1 39.5 51.1 57.8 64.9 78.2 85.0 89.6 90.8
Arizona........................................ 32.7 49.8 60.2 67.8 75.2 83.7 88.9 90.6 91.5
Utah........................................... 43.8 68.9 65.1 75.1 81.8 83.1 91.3 94.7 96.2
Nevada......................................... 41.5 69.9 82.1 87.5 92.3 96.0 97.9 98.4 98.8
Pacific:
Washington..................................... 17.5 26.9 31.8 37.9 45.2 50.7 82.3 90.5 92.9
Oregon......................................... 17.3 34.8 43.3 50.7 59.8 73.6 80.9 87.5 91.7
California..................................... 42.2 67.2 71.2 75.6 80.0 86.6 89.6 91.7 93.3
Alaska......................................... 17.2 50.0 49.3 58.0 70.9 81.3 84.4 85.4 89.8
Hawaii......................................... 39.7 58.6 70.1 74.3 84.7 90.6 94.7 97.2 97.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Rates reflect covered charges for physician claims processed during the period.
\2\ Starting with fiscal year 1993, includes data for all counties in Missouri plus two counties on the State border located in Kansas.
\3\ Starting with fiscal year 1993, includes data for all counties in Kansas excluding two countries on the State border.
\4\ Starting with fiscal year 1993, includes data for all counties in Maryland excluding two countries on the State border.
\5\ Starting with fiscal year 1993, includes data for the District of Columbia plus two counties in Maryland located on the State border plus several
counties and cities located in Virginia near the State border.
\6\ Starting with fiscal year 1993, includes data for all counties in Virginia excluding several counties and cities near the State border.
NA--Not available.
Source: Health Care Financing Administration, Bureau of Program Operations.
As the participation rate has increased, total allowed
charges billed by nonparticipating physicians have declined. In
addition, the number of unassigned claims submitted by
nonparticipating physicians has declined (see table E-10).
Total covered charges represented by unassigned claims declined
from 34.5 to 2.0 percent over the 1984-96 period. The
proportion of charges billed by participation and assignment
status varies by State; these data are shown in table E-11.
TABLE E-10.--DISTRIBUTION OF ALLOWED CHARGES FOR SERVICES BILLED BY
PARTICIPATION STATUS OF PHYSICIAN AND ASSIGNMENT STATUS OF CLAIM, 1984-
96 \1\
[In percent]
------------------------------------------------------------------------
Nonparticipants
Time period Participants -----------------------
Assigned Unassigned
------------------------------------------------------------------------
Oct. 1984-Sept. 1985.............. 36.0 29.5 34.5
Oct. 1985-Mar. 1986............... 36.3 29.4 34.3
Apr. 1986-Dec. 1986 \2\........... 38.7 28.0 32.9
Jan. 1987-Mar. 1988 \3\........... 48.1 25.2 26.7
Apr. 1988-Dec. 1988............... 57.9 21.0 21.1
Jan. 1989-Mar. 1990............... 62.0 19.0 18.5
Apr. 1990-Dec. 1990............... 67.2 16.7 16.1
Jan. 1991-Dec. 1991............... 72.3 14.6 13.1
Jan. 1992-Dec. 1992............... 78.8 11.6 9.7
Jan. 1993-Dec. 1993............... 85.5 8.5 6.0
Jan. 1994-Dec. 1994............... 89.4 6.6 4.0
Jan. 1995-Dec. 1995............... 92.6 4.6 2.8
Jan. 1996-Dec. 1996............... 94.3 3.7 2.0
------------------------------------------------------------------------
\1\ Rates reflect covered charges for physician claims processed during
the period.
\2\ The actual participation period was May through December 1986, and
the participation agreements were in effect for that time.
\3\ The actual participation period is January 1987 through March 1988,
and the participation agreements are in effect for that time.
Source: Health Care Financing Administration, Bureau of Program
Operations.
TABLE E-11.--DISTRIBUTION OF ALLOWED CHARGES FOR SERVICES BILLED BY
STATE, PARTICIPATION STATUS OF PHYSICIAN, AND ASSIGNMENT STATUS OF
CLAIM, JANUARY-DECEMBER 1996 \1\
[In percent]
------------------------------------------------------------------------
Nonparticipating
Participating physician
Census division/State physician -------------------------
Assigned Unassigned
------------------------------------------------------------------------
National....................... 94.3 3.7 2.0
New England:
Maine...................... 97.4 2.1 0.5
New Hampshire.............. 94.8 3.4 1.9
Vermont.................... 97.9 1.4 0.7
Massachusetts.............. 97.9 1.9 0.1
Rhode Island............... 99.5 0.4 0.1
Connecticut................ 95.1 3.1 1.8
Middle Atlantic:
New York................... 89.9 7.3 2.8
New Jersey................. 89.8 5.5 4.7
Pennsylvania............... 99.0 0.7 0.3
East North Central:
Ohio....................... 97.8 1.9 0.2
Indiana.................... 95.5 2.4 2.1
Illinois................... 93.0 4.2 2.8
Michigan................... 97.9 1.3 0.7
Wisconsin.................. 93.4 3.2 3.3
West North Central:
Minnesota.................. 81.9 10.9 7.2
Iowa....................... 95.0 2.0 3.1
Missouri \2\............... 94.5 3.4 2.2
North Dakota............... 96.3 1.7 2.0
South Dakota............... 66.4 8.4 25.1
Nebraska................... 88.8 3.4 7.9
Kansas \3\................. 98.0 1.0 1.0
South Atlantic:
Delaware................... 96.7 1.8 1.5
Maryland \4\............... 94.3 4.4 1.3
District of Columbia \5\... 94.9 2.6 2.5
Virginia \6\............... 97.4 1.6 1.0
West Virginia.............. 96.0 3.4 0.6
North Carolina............. 94.7 3.1 2.2
South Carolina............. 95.5 2.7 1.8
Georgia.................... 95.8 2.6 1.6
Florida.................... 95.8 3.1 1.1
East South Central:
Kentucky................... 95.5 3.2 1.3
Tennessee.................. 96.6 2.3 1.1
Alabama.................... 97.7 1.6 0.8
Mississippi................ 94.3 4.4 1.3
West South Central:
Arkansas................... 97.4 1.7 0.9
Louisiana.................. 93.6 5.3 1.1
Oklahoma................... 93.8 3.3 2.9
Texas...................... 92.5 5.4 2.1
Mountain:
Montana.................... 91.8 3.8 4.5
Wyoming.................... 81.0 5.7 13.3
Idaho...................... 69.7 9.4 20.9
Colorado................... 90.3 5.6 4.0
New Mexico................. 90.8 5.4 3.7
Arizona.................... 91.5 2.1 6.4
Utah....................... 96.2 2.1 1.7
Nevada..................... 98.8 0.7 0.5
Pacific:
Washington................. 92.9 3.1 3.9
Oregon..................... 91.7 3.8 4.5
California................. 93.3 4.9 1.8
Alaska..................... 89.8 7.4 2.8
Hawaii..................... 97.3 1.7 0.9
------------------------------------------------------------------------
\1\ Rates reflect charges for physician claims processed during the
period.
\2\ Includes data for all counties in Missouri plus two counties on the
State border located in Kansas.
\3\ Includes data for all counties in Kansas excluding two counties on
the State border.
\4\ Includes data for all counties in Maryland excluding two counties on
the State border.
\5\ Includes data for the District of Columbia plus two counties in
Maryland located on the State border plus several counties and cities
located in Virginia, near the State border.
\6\ Includes data for all counties in Virginia excluding several
counties and cities near the State border.
Source: Health Care Financing Administration, Bureau of Program
Operations.
Distribution of Physician Services
Tables E-12 to E-20 show the distribution of physicians'
services for calendar year 1995. These tables provide data from
the fourth year of the implementation of the Medicare fee
schedule. As noted earlier, the fee schedule appears to be
having its intended effect. The projected pattern of
redistribution from the procedurally oriented specialties to
the primary care specialties has begun taking place.
The 1995 data are tabulations from the 1994 National Claims
History Procedure Summary, which is a summary of all claims
filed with the Medicare carriers. The totals shown will differ
from total SMI outlay figures for 1995 shown in the budget for
several reasons. First, the amounts shown in these tables are
allowed amounts, rather than reimbursements--that is, they
include both Medicare's and the enrollee's share of approved
charges. Second, the amounts shown are for services rendered
during calendar year 1995; budget figures are for payments made
during the fiscal year regardless of when the services were
rendered. Third, the amounts shown are only for services
reimbursed by carriers under the fee schedule; hence, they do
not include part B payments to hospital outpatient departments
or to risk-based prepaid medical plans. Finally, the amounts
shown underestimate what they are supposed to represent by a
small amount because some claims for services rendered in 1995
had not been processed by carriers at the time the 1995 files
were submitted to HCFA, and because some claims recorded had to
be eliminated due to recording errors.
Table E-12 illustrates that in 1995, 76.7 percent of
allowed amounts under the fee schedule were for physicians'
services, and another 3.2 percent were for the services of
limited license practitioners--psychologists, podiatrists,
optometrists, audiologists, chiropractors, dentists, and
physical therapists. About 3.9 percent went to independent
laboratories in 1995, while 16.2 percent went to suppliers of
medical equipment, prosthetics, and ambulance services.
TABLE E-12.--ALLOWED AMOUNTS FOR CLAIMS BY TYPE OF PROVIDER, 1995
------------------------------------------------------------------------
Allowed
Type of provider amounts Percent of Percent
(millions) total inpatient
------------------------------------------------------------------------
Physicians.......................... $42,369.0 76.7 35.3
Limited license practitioners \1\... $1,784.0 3.2 1.4
Laboratories........................ $2,132.0 3.9 0.2
Medical suppliers \2\............... $8,932.0 16.2 0.8
-----------------------------------
All providers \3\............. $55,217.0 100.0 27.3
------------------------------------------------------------------------
\1\ Includes psychology, podiatry, optometry, audiology, chiropractic,
dentistry, and physical therapy.
\2\ Includes suppliers of medical equipment, prosthetics, and ambulance
services.
\3\ Total does not include charges for hospital outpatient department
facility fees or for risk-based prepaid medical plans since these are
not reimbursed under the CPR system.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
About 27.3 percent of all allowed amounts were for hospital
inpatient services, and about 35.3 percent of allowed amounts
for physicians' services were inpatient. The share of
physicians' services that are inpatient has dropped in recent
years, from nearly 64 percent in 1981.
Table E-13 shows the distribution of spending for
physicians' services by specialty. (It excludes limited license
practitioners, labs, and suppliers.) In 1995, generalists
accounted for 25.8 percent of spending, nonsurgical specialists
for 27.1 percent, and surgical specialists for 30.7 percent.
Radiologists, anesthesiologists, and pathologists together
accounted for 11.3 percent of allowed amounts. Radiation
oncologists, osteopathic manipulative therapists, intensivists,
emergency medicine physicians, and other physician specialties
accounted for 5 percent of total allowed amounts for
physicians' services.
The major physician specialties treating the Medicare
population, in descending order of importance as measured by
total allowed amounts, were general internists (13.5 percent of
allowed amounts), ophthalmologists (9.6 percent), cardiologists
(8.7 percent), radiologists (7.0 percent), and family
practitioners (6.2 percent).
TABLE E-13.--ALLOWED AMOUNTS FOR PHYSICIANS' SERVICES BY SPECIALTY, 1995
------------------------------------------------------------------------
Allowed Percent
Specialty charges of Percent
(millions) total inpatient
------------------------------------------------------------------------
Generalists:
Internal medicine.............. $5,704.0 13.5 36.0
Family practice................ 2,633.0 6.2 23.5
Clinics........................ 1,417.0 3.3 35.8
General practice............... 1,149.0 2.7 17.6
Pediatrics..................... 42.0 0.1 22.8
------------------------------------
All generalists.............. 10,945.0 25.8 31.0
====================================
Nonsurgical specialists:
Cardiology..................... 3,693.0 8.7 51.2
Gastroenterology............... 1,170.0 2.8 42.5
Psychiatry..................... 968.0 2.3 31.6
Dermatology.................... 966.0 2.3 0.8
Hematology/oncology............ 941.0 2.2 17.1
Pulmonary disease.............. 897.0 2.1 64.8
Nephrology..................... 709.0 1.7 49.1
Neurology...................... 663.0 1.6 43.2
Physical medicine and
rehabilitation................ 326.0 0.8 53.0
Medical oncology............... 284.0 0.7 16.3
Rheumatology................... 240.0 0.6 12.4
Infectious disease............. 189.0 0.4 75.5
Endocrinology.................. 177.0 0.4 32.9
Allergy/immunology............. 101.0 0.2 3.5
Geriatric medicine............. 77.0 0.2 29.2
Nuclear medicine............... 65.0 0.2 18.9
Peripheral vascular disease.... 24.0 0.1 58.5
------------------------------------
All nonsurgical specialists.. 11,487.0 27.1 39.9
====================================
Surgical specialists:
Ophthalmology.................. 4,082.0 9.6 1.9
General surgery................ 2,137.0 5.0 61.8
Orthopedic surgery............. 2,101.0 5.0 57.9
Urology........................ 1,784.0 4.2 23.9
Thoracic surgery............... 728.0 1.7 89.5
Otolaryngology................. 514.0 1.2 13.5
Neurosurgery................... 363.0 0.9 83.1
Gynecology/obstetrics.......... 338.0 0.8 37.7
Cardiac surgery................ 314.0 0.7 96.4
Vascular surgery............... 283.0 0.7 71.5
Plastic and reconstructive
surgery....................... 215.0 0.5 28.9
Colorectal surgery............. 83.0 0.2 35.4
Hand surgery................... 29.0 0.1 17.9
Surgical oncology.............. 27.0 0.1 56.4
------------------------------------
All surgical specialists..... 12,999.0 30.7 37.0
====================================
Other:
Radiology...................... 2,949.0 7.0 28.6
Anesthesiology................. 1,291.0 3.0 65.7
Emergency medicine............. 734.0 1.7 3.6
Pathology...................... 554.0 1.3 40.2
Radiation oncology............. 502.0 1.2 4.6
Critical care (intensivists)... 62.0 0.1 78.3
Manipulative therapy........... 20.0 (\1\) 16.0
Other physician specialties.... 827.0 2.0 21.0
------------------------------------
Total--all physicians........ 42,369.0 100.0 35.3
------------------------------------------------------------------------
\1\ Less than 0.1 percent.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
The share of services provided on an inpatient basis varied
by specialty, generally increasing with specialization. About
31 percent of the services of generalists were inpatient in
1995. The inpatient share for nonsurgical specialists was 39.9
percent and 37 percent for surgical specialists.
Table E-14 shows the distribution of spending for
physicians' services by type of service. About 39 percent of
spending was for medical care (nonsurgical) in 1995. About 32.3
percent of spending was for surgical procedures in total,
adding together the amounts for surgeons, assistant surgeons,
and anesthesiologists. About 9.8 percent was for diagnostic
laboratory tests, which would include not only blood chemistry
analysis and urinalysis, but also tests such as EKGs. About 9.6
percent of spending was for radiology, and 5.2 percent was for
consultations.
TABLE E-14.--ALLOWED AMOUNTS FOR PHYSICIANS' SERVICES BY TYPE OF
SERVICE, 1995
------------------------------------------------------------------------
Allowed
Type of service charges Percent of Percent
(millions) total inpatient
------------------------------------------------------------------------
Medical care..................... $16,564.0 39.1 31.8
Surgery.......................... 12,099.0 28.6 48.0
Assistance at surgery............ 245.0 0.6 92.8
Anesthesia....................... 1,315.0 3.1 64.6
Diagnostic laboratory tests...... 4,151.0 9.8 18.3
Diagnostic radiology............. 3,349.0 7.9 22.0
Consultations \1\................ 2,221.0 5.2 57.4
Therapeutic radiology............ 726.0 1.7 4.8
Mammography...................... 64.0 0.2 0.4
Pneumococcal vaccine............. 93.0 0.2 ...........
Other \2\........................ 1,540.0 3.6 0.3
--------------------------------------
All services............... 42,369.0 100.0 35.3
------------------------------------------------------------------------
\1\ Includes first and second opinions for surgery.
\2\ Includes treatment for renal patients, pneumococcal vaccine, and
medical supplies, among other services.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
Table E-15 lists the top 20 individual services, ranked by
total allowed amounts on claims submitted by selected
physicians for 1995. The most important exclusion is amounts
for the services of anesthesiologists, since there would
typically be a charge for anesthesiology for the surgical
procedures. The amounts for surgical procedures include claims
by both the primary surgeon and any assistant surgeons, but not
the amounts for anesthesiologists.
TABLE E-15.--TOP 20 SERVICES BILLED BY PHYSICIANS UNDER MEDICARE, 1995
------------------------------------------------------------------------
Allowed
Rank order Service Description charges Percent
code (millions) of total
------------------------------------------------------------------------
1. 99213 Office/outpatient visit, $2,856 6.7
EST.
2. 66984 Remove cataract, insert 2,096 4.9
lens.
3. 99214 Office/outpatient visit, 1,678 4.0
EST.
4. 99232 Subsequent hospital care 1,656 3.9
5. 99231 Subsequent hospital care 876 2.1
6. 99233 Subsequent hospital 822 1.9
care--comprehensive.
7. 99212 Office/outpatient visit, 735 1.7
EST.
8. 99223 Initial hospital care... 596 1.4
9. 99215 Office/outpatient visit, 577 1.4
EST.
10. 88305 Tissue exam by 497 1.2
pathologist.
11. 90844 Psychotherapy 45-50 486 1.1
minutes.
12. 99254 Initial inpatient 470 1.1
consult.
13. J9217 Leuprolide acetate 456 1.1
suspension.
14. 93307 Echo exam of heart...... 445 1.1
15. 99285 Emergency room visit.... 413 1.0
16. 92014 Eye, exam and treatment. 366 0.9
17. 99238 Hospital discharge pay.. 360 0.9
18. 99255 Initial inpatient 360 0.8
consult.
19. E1400 Oxygen concentrator less 357 0.8
than 2 lite.
20. 99284 Emergency department 346 0.8
visit.
----------------------
Total................... 16,450 38.8
------------------------------------------------------------------------
\1\ Amounts for surgical procedures include fees for primary and
assistant surgeons, but not for anesthesiologists.
Note.--EST = established patient.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
The top 20 services (out of more than 7,000) accounted for
38.8 percent of all spending for all physicians' services in
1995. Cataract extraction with implantation of an intraocular
lens was the highest ranked surgical procedure, accounting by
itself for 4.9 percent of total allowed amounts for physicians'
services. Most of the services in the top 20 were evaluation
and management services (that is, visits and consultations).
Table E-16 presents total allowed amounts for selected
groups of generic services, and shows the percent of total
allowed amounts for all physicians' services accounted for by
each group. As in table E-15, certain physicians' services--
most notably for anesthesiologists--are not included in the
allowed amounts for each service group. No attempt was made to
define and rank all possible service groups, so that there may
be other important service groups that do not appear in the
table. For example, diagnostic radiology accounts for 7.9
percent of allowed amounts for physicians' services (from table
E-14), but radiological services do not appear in table E-16.
TABLE E-16.--ALLOWED AMOUNTS FOR SELECTED GROUPS OF PHYSICIANS'
SERVICES, 1995
------------------------------------------------------------------------
Allowed
Service group charges Percent
(millions) \1\ of total
------------------------------------------------------------------------
Office visits (99201-99215)................... $6,718 15.9
Hospital visits (99221-99238)................. 4,662 11.0
Cataract surgery (66830-66985)................ 2,123 5.0
Emergency room visits (99281-99285)........... 1,065 2.5
SNF visits (99301-99313)...................... 803 1.9
EKGs (93000-93018, 93015-26).................. 719 1.7
Colonoscopy (45378-45385, 44388-44393, 45355). 576 1.4
Cardiac catheterization (93501-93553)......... 527 1.2
Knee arthroplasty (27446, 27447, 29881)....... 372 0.9
Coronary artery bypass (33510-33516).......... 206 0.5
Hemodialysis/CAPD (90935-90947)............... 171 0.4
Hip arthroplasty (27130-27132)................ 168 0.4
Thromboendarterectomy (35301-35381)........... 166 0.4
Transurethal surgery (52602).................. 127 0.3
Pacemaker inplant/removal (33200-33214, 33233-
33237)....................................... 104 0.2
Home visits (99341-99353)..................... 94 0.2
Pacemaker tests (93731-93736)................. 86 0.2
Vein bypass (35501-35587)..................... 79 0.2
Prostatectomy (55801-55845)................... 58 0.1
Nursing home visits (99321-99333)............. 42 0.1
EEGs (95816-95827, 95950, 95955).............. 41 0.1
-------------------------
Total................................... 18,908 44.6
------------------------------------------------------------------------
\1\ Amounts for surgical procedures include fees for primary and
assistant surgeons, but not for anesthesiologists.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
The 21 service groups shown in table E-16 accounted for
44.6 percent of all allowed amounts for all physicians'
services in 1995. The single most costly group was office
visits (accounting for 15.9 percent of total allowed amounts
for physicians' services), followed by hospital visits (11.0
percent). Cataract surgery of all types accounted for 5.0
percent of total allowed amounts for physicians' services. It
should also be noted that the amount for hemodialysis includes
only physician services and does not include the much larger
amounts for the facility charges for hemodialysis that were not
billed under the fee-for-service reimbursement system.
In recent years, there have been many changes in the
delivery of health care services. Some of the more significant
changes affecting Medicare services have been in the delivery
of surgical services. First, there has been significant growth
in the amount of surgical care provided by some specialties.
Second, there has been a dramatic shift in the place of
surgical care; that is, surgical care is now frequently
provided in outpatient settings, whereas previously most
surgical care was provided in inpatient settings.
As shown in table E-17, the most significant shift in site
of surgical care between 1980 and 1995 was out of inpatient
settings and into other settings. Outpatient hospital settings
benefited most from this shift, growing from only 3.3 percent
of all surgical charges in 1980 to 25.5 percent in 1995. The
proportions of surgery taking place in a physician's office and
in other nonhospital settings also grew. In 1995 the proportion
of all surgical care provided in inpatient settings had dropped
to 45.3 percent.
Table E-18 shows the percent of total surgical charges by
specialty in 1980 and 1995. In 1980, three specialties
(ophthalmology, general surgery, and orthopedic surgery)
accounted for nearly half of all Medicare surgical care. These
same three specialties accounted for close to 44 percent of
total surgical care in 1995. The shares among these specialties
changed. While ophthalmologists accounted for only 13.6 percent
in 1980, by 1995 their share had increased to 20.4 percent due
primarily to the substantial growth in cataract surgery during
the 1980s. For gastroenterologists, surgical care represented
much larger proportions of their total Medicare practice in
1995 than in 1980. On the other hand, surgical charges for
urologists represented much smaller proportions of their total
Medicare practice in 1995 than in 1980.
As shown in table E-19, many different medical specialties
participated in the shift to outpatient surgery. In 1980, only
two specialties (dermatology and podiatry) performed the
majority of their surgical services in outpatient settings; in
these cases, the care was generally provided in the physician's
office. In 1995, eight specialties provided a majority of their
surgical care in outpatient settings: ophthalmology, podiatry,
gastroenterology, dermatology, ENT (otology, laryngology, and
rhinology), internal medicine, plastic surgery, and urology.
Podiatrists and dermatologists continued primarily to work in
their offices; internists split their noninpatient work between
office and outpatient settings, while most of the other
specialties provided their surgical services in outpatient
hospital and ambulatory surgical facilities. Most surgical
specialties, such as general, orthopedic, cardiovascular,
neurological, and thoracic surgeons, remained closely tied to
inpatient hospital settings.
In 1995, ophthalmologists provided most (39.9 percent) of
the surgery done in outpatient hospital settings (see table E-
20). The predominance of ophthalmologists in this setting is
due to cataract surgery. Dermatologists accounted for the
largest proportion of office surgical charges, 24.7 percent.
However, ophthalmologists and podiatrists also represented
significant percentages of office surgical charges, 20.3 and
17.6 percent respectively. In inpatient settings, the
traditional surgical specialties--general surgery, orthopedic
surgery, cardiovascular surgery, thoracic surgery, and urology
accounted for 64.9 percent of all surgical charges.
Table E-21 summarizes the geographic practice cost indices
for 1997.
TABLE E-17.--CHARGES SUBMITTED TO MEDICARE FOR ALL PHYSICIAN SURGICAL
SERVICES BY PLACE OF SERVICE, SELECTED YEARS 1980-95
------------------------------------------------------------------------
Surgical charges \1\
-----------------------------------
As percent
Year and place of service Amount in Percent of of total
millions surgical settings
charges charges
------------------------------------------------------------------------
1980:
Office.......................... $445 11.6 12.2
Outpatient hospital \1\......... 129 3.3 29.5
Inpatient hospital.............. 3,231 84.4 44.1
Other \2\....................... 23 0.6 3.7
-----------------------------------
Total....................... 3,828 100.0 31.8
===================================
1990:
Office.......................... 2,004 18.1 16.2
Outpatient hospital \1\......... 2,867 26.0 54.3
Inpatient hospital.............. 5,563 50.4 40.6
Ambulatory surgical center...... 488 4.4 51.2
Other \2\....................... 127 1.1 14.5
-----------------------------------
Total....................... 11,048 100.0 33.3
===================================
1993:
Office.......................... 2,128 19.7 14.1
Outpatient hospital \1\......... 2,731 25.3 48.4
Inpatient hospital.............. 5,085 47.2 38.4
Ambulatory surgical center...... 697 6.5 90.5
Other \2\....................... 136 1.3 11.1
-----------------------------------
Total....................... 10,777 100.0 30.0
===================================
1994:
Office.......................... 2,379 20.0 14.0
Outpatient hospital \1\......... 3,046 25.6 47.9
Inpatient hospital.............. 5,518 46.4 38.5
Ambulatory surgical center...... 798 6.7 91.0
Other \2\....................... 162 1.4 8.7
-----------------------------------
Total....................... 11,904 100.0 29.5
===================================
1995:
Office.......................... 2,656 20.7 14.3
Outpatient hospital \1\......... 3,273 25.5 47.3
Inpatient hospital.............. 5,817 45.3 38.8
Ambulatory surgical center...... 887 6.9 91.0
Other \2\....................... 195 1.5 8.9
-----------------------------------
Total....................... 12,828 100.0 29.3
------------------------------------------------------------------------
\1\ May include some services rendered in an ambulatory surgical center.
Medicare began covering services in ambulatory surgical centers in
1982.
\2\ Includes homes, nursing homes, and other places of service.
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
TABLE E-18.--SUBMITTED SURGICAL CHARGES AS A SHARE OF TOTAL SURGICAL
CHARGES AND AS A PERCENT OF TOTAL PRACTICE CHARGES BY MEDICAL SPECIALTY,
1980 AND 1995
------------------------------------------------------------------------
Percent Surgical charges
distribution of as a percent of
surgical charges total practice
Specialty -------------------- charges
-------------------
1980 1995 1980 1995
------------------------------------------------------------------------
Ophthalmology................... 13.6 20.4 62.1 64.0
General surgery................. 22.1 11.8 71.6 71.0
Orthopedic surgery.............. 13.0 11.6 73.6 70.9
Cardiovascular disease.......... 2.7 6.4 22.4 22.2
Urology......................... 10.7 5.8 75.6 41.9
Gastroenterology................ 1.7 5.5 45.9 60.1
Dermatology..................... 2.4 5.3 60.9 70.0
Podiatry........................ 3.0 5.3 53.5 69.1
Thoracic surgery................ 8.0 4.7 82.2 82.4
Internal medicine............... 4.2 2.4 6.9 5.5
Clinic and other group practice. 4.7 2.3 25.8 20.9
Neurological surgery............ 2.9 2.2 70.2 78.0
Otology, laryngology, rhinology. 1.9 1.7 49.7 43.7
Plastic surgery................. 1.3 1.4 88.1 84.0
Other........................... 8.4 13.2 ........ 9.5
---------------------------------------
All physicians............ 100.0 100.0 31.8 29.5
------------------------------------------------------------------------
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
TABLE E-19.--SUBMITTED SURGICAL CHARGES UNDER MEDICARE BY MEDICAL SPECIALTY AND PLACE OF SERVICE, 1980 AND 1995
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1980 1995
-------------------------------------------------------------------------------------------------------------
Medical specialty Inpatient Outpatient Inpatient Outpatient
Office hospital hospital Other \1\ Office hospital hospital \2\ ASC \3\ Other \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
General surgery........................... 4.4 92.6 2.9 0.1 5.3 69.6 23.4 1.4 0.2
Cardiovascular disease.................... 1.7 97.9 0.4 (\4\) 1.9 82.2 14.8 0.1 1.0
Dermatology............................... 94.6 4.0 0.9 0.6 97.1 0.2 2.0 0.5 0.2
Gastroenterology.......................... 12.0 75.6 12.3 0.1 6.9 35.2 48.7 9.0 0.1
Internal medicine......................... 17.5 76.6 5.7 0.2 25.3 41.6 30.2 2.5 0.4
Neurological surgery...................... 1.1 98.5 0.5 (\4\) 1.0 94.8 4.0 0.1 0.0
Obstetrics/gynecology..................... .......... .......... .......... .......... 15.7 70.7 12.4 1.0 0.1
Otology, laryngology, rhinology........... 12.6 83.7 3.7 (\4\) 34.1 23.6 37.4 4.4 0.4
Ophthalmology............................. 7.9 87.1 5.0 0.1 20.6 2.6 50.0 26.5 0.3
Orthopedic surgery........................ 6.3 90.2 3.4 0.1 8.0 75.3 14.9 1.6 0.1
Plastic surgery........................... 13.0 67.2 19.7 0.1 22.2 30.2 39.7 7.5 0.4
Thoracic surgery.......................... 0.8 98.7 0.5 (\4\) 0.6 96.4 2.9 0.1 0.0
Urology................................... 8.0 90.6 1.4 0.1 27.5 46.8 23.6 1.9 0.2
Podiatry.................................. 71.3 13.5 0.9 14.3 68.8 1.3 4.9 1.6 23.4
Clinic and other group practice........... 10.1 85.3 4.5 0.1 12.3 59.9 25.7 1.9 0.3
Other..................................... .......... .......... .......... .......... 16.9 59.9 21.5 1.3 0.5
-------------------------------------------------------------------------------------------------------------
All physicians...................... 11.6 84.4 3.3 0.5 20.7 45.3 25.5 6.9 1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes homes, nursing homes, and other places of service. Medicare began covering services in ambulatory surgical centers in 1982.
\2\ May include some services rendered in an ASC.
\3\ Ambulatory surgical center.
\4\ Less than 0.05.
Source: Health Care Financing Administration, Bureau of Data Management and Strategy.
TABLE E-20.--PERCENT DISTRIBUTION OF ALLOWED SURGICAL CHARGES BY
SELECTED SPECIALTIES AND SELECTED PLACE OF SERVICE, 1995
------------------------------------------------------------------------
Place of service Percent
------------------------------------------------------------------------
Inpatient hospital:
Orthopedic surgery........................................ 19.3
General surgery........................................... 18.1
Cardiovascular disease.................................... 11.6
Thoracic surgery.......................................... 9.9
Urology................................................... 6.0
Neurological surgery...................................... 4.6
Gastroenterology.......................................... 4.3
Clinic and other group practice........................... 3.0
Internal medicine......................................... 2.2
Ophthalmology............................................. 1.2
Other medical and surgical specialties.................... 19.8
---------
Total................................................... 100.0
=========
Office:
Dermatology............................................... 24.7
Ophthalmology............................................. 20.3
Podiatry.................................................. 17.6
Urology................................................... 7.7
Orthopedic surgery........................................ 4.5
Family Practice........................................... 3.4
General surgery........................................... 3.0
Internal medicine......................................... 3.0
Gastroenterology.......................................... 1.8
Clinic and other group practice........................... 1.3
Other medical and surgical specialties.................... 12.6
---------
Total................................................... 100.0
=========
Outpatient hospital:
Ophthalmology............................................. 39.9
General surgery........................................... 10.8
Gastroenterology.......................................... 10.5
Orthopedic surgery........................................ 6.8
Urology................................................... 5.4
Internal medicine......................................... 2.9
Otology, larynology, rhinology............................ 2.6
Clinic and other group practice........................... 2.3
Plastic surgery........................................... 2.2
Other medical and surgical specialties.................... 16.7
---------
Total................................................... 100.0
------------------------------------------------------------------------
Source: Health Care Financing Administration, Bureau of Data Management
and Strategy.
TABLE E-21.--1997 GEOGRAPHIC PRACTICE COST INDICES BY MEDICARE CARRIER
AND LOCALITY
------------------------------------------------------------------------
Cost indices
Carrier Locality --------------------------------
number number Locality name Practice
Work expense Malpractice
------------------------------------------------------------------------
00510.. 00 Alabama............. 0.980 0.871 0.927
01020.. 01 Alaska.............. 1.064 1.155 1.617
01030.. 00 Arizona............. 0.996 0.955 1.321
00520.. 13 Arkansas............ 0.954 0.853 0.427
00542.. 03 Marin/Napa/Solano,
CA................. 1.015 1.180 0.596
00542.. 05 San Francisco, CA... 1.068 1.330 0.596
00542.. 06 San Mateo, CA....... 1.049 1.300 0.596
00542.. 07 Oakland/Berkeley, CA 1.042 1.215 0.596
00542.. 09 Santa Clara, CA..... 1.064 1.289 0.596
02050.. 17 Ventura............. 1.028 1.192 0.686
02050.. 18 Los Angeles, CA..... 1.056 1.207 0.752
02050.. 26 Anaheim/Santa Ana,
CA................. 1.037 1.205 0.752
02050.. 99 Rest of California.. 1.009 1.048 0.627
00542.. 99 Rest of California.. 1.009 1.048 0.627
00824.. 01 Colorado............ 0.989 0.951 0.827
10230.. 00 Connecticut......... 1.050 1.194 1.001
00570.. 01 Delaware............ 1.021 1.032 0.792
00580.. 01 DC & MD/VA Suburbs.. 1.051 1.192 0.980
00590.. 04 Miami, FL........... 1.016 1.087 2.456
00590.. 03 Ft. Lauderdale, FL.. 0.998 1.036 1.867
00590.. 99 Rest of Florida..... 0.977 0.944 1.417
01040.. 01 Atlanta, GA......... 1.007 1.030 0.902
01040.. 99 Rest of Georgia..... 0.971 0.891 0.902
01120.. 01 Hawaii.............. 0.999 1.220 0.921
05130.. 00 Idaho............... 0.962 0.882 0.588
00621.. 16 Chicago, IL......... 1.028 1.080 1.382
00621.. 15 Suburban Chicago, IL 1.007 1.093 1.159
00621.. 12 East St. Louis, IL.. 0.988 0.929 1.202
00621.. 99 Rest of Illinois.... 0.965 0.884 0.824
00630.. 00 Indiana............. 0.982 0.917 0.356
00640.. 00 Iowa................ 0.960 0.877 0.679
00650.. 00 Kansas.............. 0.964 0.891 1.191
00660.. 00 Kentucky............ 0.971 0.869 0.819
00528.. 01 New Orleans, LA..... 0.999 0.946 0.997
00528.. 99 Rest of Louisiana... 0.969 0.870 0.912
21200.. 03 Southern Maine...... 0.980 1.034 0.759
21200.. 99 Rest of Maine....... 0.962 0.925 0.759
00901.. 01 Baltimore/Surr Ctys,
MD................. 1.021 1.036 1.115
00901.. 99 Rest of Maryland.... 0.984 0.953 0.862
00700.. 01 Boston, MA.......... 1.040 1.213 0.978
00700.. 99 Rest of
Massachusetts...... 1.012 1.086 0.978
00623.. 01 Detroit, MI......... 1.043 1.038 3.051
00623.. 99 Rest of Michigan.... 0.998 0.935 1.844
10240.. 00 Minnesota........... 0.990 0.965 0.594
10250.. 00 Mississippi......... 0.958 0.845 0.726
11260.. 01 St. Louis, MO....... 0.994 0.944 1.207
00740.. 02 Metro Kansas City,
MO................. 0.989 0.949 1.207
00740.. 99 Rest of Missouri.... 0.947 0.835 1.159
11260.. 99 Rest of Missouri.... 0.947 0.835 1.159
00751.. 01 Montana............. 0.952 0.864 0.756
00655.. 00 Nebraska............ 0.951 0.872 0.444
01290.. 00 Nevada.............. 1.007 1.029 0.887
00780.. 40 New Hampshire....... 0.988 1.034 0.916
00860.. 01 Northern New Jersey. 1.059 1.215 0.762
00860.. 99 Rest of New Jersey.. 1.029 1.115 0.762
01360.. 05 New Mexico.......... 0.975 0.903 0.792
00803.. 01 Manhattan, NY....... 1.095 1.359 1.546
00803.. 02 NYC Suburbs/LI, NY.. 1.068 1.235 1.759
00803.. 03 Poughkeepsie/N NYC,
NY................. 1.011 1.081 1.218
14330.. 04 Queens, NY.......... 1.058 1.240 1.686
00801.. 99 Rest of New York.... 1.002 0.955 0.821
05535.. 00 North Carolina...... 0.971 0.918 0.435
00820.. 01 North Dakota........ 0.951 0.860 0.617
16360.. 00 Ohio................ 0.991 0.940 1.049
01370.. 00 Oklahoma............ 0.970 0.882 0.481
01380.. 01 Portland, OR........ 0.996 0.998 0.637
01380.. 99 Rest of Oregon...... 0.963 0.930 0.637
00865.. 01 Philadelphia, PA.... 1.025 1.091 1.314
00865.. 99 Rest of Pennsylvania 0.990 0.924 0.735
00973.. 20 Puerto Rico......... 0.883 0.739 0.268
00870.. 01 Rhode Island........ 1.019 1.074 1.569
00880.. 01 South Carolina...... 0.976 0.899 0.361
00820.. 02 South Dakota........ 0.936 0.856 0.443
05440.. 35 Tennessee........... 0.976 0.899 0.524
00900.. 09 Brazoria, TX........ 0.993 0.966 1.428
00900.. 11 Dallas, TX.......... 1.012 1.012 0.893
00900.. 15 Galveston, TX....... 0.989 0.966 1.428
00900.. 18 Houston, TX......... 1.021 1.005 1.428
00900.. 20 Beaumont, TX........ 0.993 0.893 1.428
00900.. 28 Fort Worth, TX...... 0.989 0.972 0.893
00900.. 31 Austin, TX.......... 0.987 0.986 0.827
00900.. 99 Rest of Texas....... 0.967 0.879 0.839
00910.. 09 Utah................ 0.978 0.891 0.644
00780.. 50 Vermont............. 0.974 0.988 0.452
10490.. 00 Virginia............ 0.987 0.941 0.518
00973.. 50 Virgin Islands...... 0.966 0.978 1.023
01390.. 02 Seattle (King Co),
WA................. 1.006 1.077 0.748
01390.. 99 Rest of Washington.. 0.983 0.961 0.748
16510.. 00 West Virginia....... 0.964 0.850 1.004
00951.. 00 Wisconsin........... 0.982 0.926 1.160
00825.. 21 Wyoming............. 0.968 0.881 0.811
------------------------------------------------------------------------
Note.--Work geographic practice cost index (GPCI) is the 1/4 work GPCI
required by section 1848(e)(1)(A)(iii) of the Social Security Act.
Source: Federal Register (1996b).
REFERENCES
Federal Register. (1996a, November 22). Medicare Program;
Physician fee schedule update for calendar year 1997
and Physician volume performance standard Rates of
Increase for Federal fiscal year 1997; Final notice.
61(227). pp. 59717-24.
Federal Register. (1996b, November 22). Medicare Program;
Revisions to Payment Policies and Five-Year Review of
and Adjustments to the Relative Value Units Under the
Physician fee schedule update for calendar year 1997;
Final rule. 61(227). pp. 59490-714.
Physician Payment Review Commission. (1997). Annual report to
Congress. Washington, DC: Author.