A critique of the practice-expense values of the resource-based relative value scale

The resource-based relative value scale (RBRVS) was implemented by the Health Care Financing Administration on January 1, 1992. The practice-expense payments from the old Medicare fee scale were moved unchanged into RBRVS. This resulted in underpayment of office-based practice expenses and overpayment of hospital-based practice expenses. For example, office visits are underpaid by $10.28, whereas coronary angiograms are overpaid by $123.00. Unpaid practice expenses reduce the after-expense physician-work fee of the average office visit by about one half, yet overpayment of practice expenses for some hospital procedures almost doubles the after-expense physician-work fee for some subspecialties. Inflation will likely increase the actual practice expense of the average office visit to the point that the after-expense physician-work fee for the family physician will be reduced to zero by the year 2001.