Unintended consequences of eliminating medicare payments for consultations

Prior to 2010, Medicare payments for consultations (commonly billed by specialists) were substantially higher than for office visits of similar complexity (commonly billed by primary care physicians). In January 2010, Medicare eliminated consultation payments from the Part B Physician Fee Schedule and increased fees for office visits. This change was intended to be budget neutral and to decrease payments to specialists while increasing payments to primary care physicians. We assessed the impact of this policy on spending, volume, and complexity for outpatient office encounters in 2010.

We examined outpatient claims from 2007 through 2010 for 2 247 810 Medicare beneficiaries with Medicare Supplemental (Medigap) coverage through large employers in the Thomson Reuters MarketScan Database. We used segmented regression analysis to study changes in spending, volume, and complexity of office encounters adjusted for age, sex, health status, secular trends, seasonality, and hospital referral region.

"New" office visits largely replaced consultations in 2010. An average of $10.20 more was spent per beneficiary per quarter on physician encounters after the policy (6.5% increase). The total volume of physician encounters did not change significantly. The increase in spending was largely explained by higher office-visit fees from the policy and a shift toward higher-complexity visits to both specialists and primary care physicians.

The elimination of consultations led to a net increase in spending on visits to both primary care physicians and specialists. Higher prices, partially owing to the subjectivity of codes in the physician fee schedule, explained the spending increase, rather than higher volumes.