December 1998 AAOS Report

Academy files suit challenging HCFA practice expense

In related news, a coalition of 11 national medical societies, including the Academy, filed suit on Nov. 4 in federal district court in Chicago challenging the Health Care Financing Administration's (HCFA) rules for phasing-in the new practice expense component of the Medicare physician fee schedule. According to the plaintiff medical societies, HCFA's formula for phasing-in resource-based practice expense relative value units (PE-RVUs) is in direct conflict with the transition formula required by the language of the Balanced Budget Act of 1997. The plaintiffs contend that the unlawful transition formula will lead to $495 million in unauthorized fee reductions for certain physician services over the 1999-2001 transition period. Because the new fee schedule is scheduled to take effect Jan. 1, 1999, the plaintiffs have filed a motion for expedited relief.

The medical societies say the 1997 budget act authorized a one-time downward adjustment of not more than $390 million for certain nonoffice-based physician services. Further, they said that by using the adjusted 1998 PE-RVUs in the transition formula, HCFA will perpetuate the reduction for three additional years, resulting in total reductions of $825 million from 1998-2001. The societies also stated that most private sector insurance companies use the Medicare Fee Schedule to pay physicians, thus compounding the impact on patient care services.

The medical societies joining the Academy in the suit include the American Academy of Ophthalmology; American Association of Neurological Surgeons; American College of Cardiology; American College of Gastroenterology; American Gastroenterological Association; American Society for Gastrointestinal Endoscopy; American Society of Cataract and Refractive Surgery; Congress of Neurological Surgeons; Outpatient Ophthalmic Surgery Society; and Society for Excellence in Eyecare, Inc.


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