Medicare revenue in large medical groups

The aged are the heaviest users of physician services. A ageing population and escalation in medical costs have pressured Medicare budgets, which have increased fastest in Part B physician reimbursement. Policy responses include adoption of the Resource Based Relative Value Scale (RBRVS) for physician payment. This paper considers receipt of Medicare revenues by large medical groups and expectations of how groups will fare under RBRVS. In a 73-percent sample of U.S. large group practices, Medicare coverage accounted for one-fourth of clients, Medicare-related revenues for slightly more than one-fourth of revenues, suggesting a slightly higher revenue intensity for Medicare clients, but showing no evidence of truly disproportionate revenues from Medicare users. Medicare shares of revenues are explained by factors related to Medicare clientele and geriatric service provision. Overly-strict Medicare assignment policy may control costs by limiting access to needed care, rather than by limiting overpayments to physicians. Expectations as to how groups will fare under RBRVS are not found to be related to reliance on Medicare, rather to group auspices and ability to contain costs under Medicare payment. The findings are important not only to physician payment under RBRVS but also under health care reform.