Payment for diabetes care under the Medicare fee schedule

The system Medicare uses to determine physician payment is inequitable to physicians who provide primarily evaluation and management (EM) services. This creates financial incentives that may discourage physicians from providing Medicare patients with care that meets the American Diabetes Association's standards. Under Medicare's resource-based fee schedule, which will be phased in beginning January 1992, payment for EM services should more accurately reflect the time, effort, and overhead costs involved in providing them. This article describes how physician payment will be determined under the Medicare fee schedule and examines the probable effects of changes in payment on the physicians who care for patients with diabetes and the quality of services they provide.