July 1998 AAOS Report

HCFA releases practice expense; 1 percent decrease for orthopaedists

In June, the Health Care Financing Administration (HCFA) issued its long-awaited proposed new Medicare practice expense payment amounts for physician services. Under the new proposal, overall spending on services provided by orthopaedists is projected to decrease by only 1 percent by the year 2002 compared with last year's proposal that would have resulted in a 14 percent decrease for services performed by orthopaedic surgeons. Payment amounts for individual services still vary considerably and specialties that furnish more office-based services will experience larger increases in Medicare payment amounts than specialties that provide fewer office-based services. The smaller decrease for orthopaedics is due to the delay in implementing the proposed new practice expense payments that the Academy and its Practice Expense Coalition requested from Congress. Under the terms of the delay, HCFA had to reexamine its practice cost study and make sure it met generally accepted cost accounting principles. Congress also instructed the government's General Accounting Office (GAO) to critique HCFA's study. HCFA modified its study, in part, because of GAO criticisms, some of which came from discussions between the GAO and Practice Expense Coalition members. The Academy is currently reviewing the 548-page HCFA proposal. The Academy plans to comment on the problems that still exist in the study and the proposed new practice expense payment amounts. The Academy also will express its views on how the results of HCFA's practice cost study should be refined during the three-year phase-in period.

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