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Allocating practice expense under the Medicare fee schedule.

G C Pope1, R T Burge

  • 1Center for Health Economics Research, Waltham, MA.

Health Care Financing Review
|January 3, 1994
PubMed
Summary
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A new specialty resource-based method for determining Medicare practice expense payments is proposed. This approach aligns payments with actual physician expenses, using existing Medicare fee schedule data.

Area of Science:

  • Health Economics
  • Medical Policy

Background:

  • Current Medicare fee schedule (MFS) practice expense payments rely on historical physician charges.
  • This method is inconsistent with the goal of a resource-based fee schedule.

Purpose of the Study:

  • To present and simulate a specialty resource-based method for determining practice expense payments.
  • To propose an alternative to the current MFS approach.

Main Methods:

  • Developed a method where practice expense payments are proportional to actual physician practice expenses relative to total revenues.
  • Simulated the proposed method.

Main Results:

  • The proposed specialty-based method yields similar fees compared to the Physician Payment Review Commission (PPRC) approach.

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  • The method requires no additional data beyond existing MFS information.

    • Conclusions:

    • A specialty resource-based method offers a more consistent approach to practice expense payments.
    • This method is data-efficient, utilizing existing Medicare fee schedule data.