August 1998 Bulletin

Payments down 1% overall

HCFA proposal favors office-based services

Medicare payments for orthopaedic surgeons' practices expenses would decrease, overall, by 1 percent by the year 2002, compared with Health Care Financing Administration's earlier proposal which would have reduced practice expense payments by 14 percent.

Payment amounts for individual services still vary considerably and specialties that provide more office-based services will experience larger increases or smaller decreases in Medicare payments than specialties that provide fewer office-based services.

Alan H. Morris, MD, chair of the Academy's Council on Health Policy and Practice, said "the smaller decrease for orthopaedics is due to the delay in implementing the proposed new practice expense payments that the Academy and its Practice Cost Coalition had requested from the Congress."

The new proposal which goes into effect Jan. 1, 1999, came after Congress ordered HCFA to review its earlier proposal and make sure it met generally accepted cost accounting principles. Congress also ordered the 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 Cost Coalition members. The most significant methodological change in HCFA's practice cost study is the use of data from the American Medical Association's Socioeconomic Monitoring System. Originally, HCFA relied almost exclusively on data collected from its Clinical Practice Expert Panels, much of which was suspect.

The 548-page proposal, published in the Federal Register June 5, 1998, is being reviewed by the Academy and other specialty societies. The Academy will comment on problems which still exist in the study and the proposed new practice expense payment amounts. The Academy also will comment on how the results of HCFA's practice cost study should be refined during the three-year phase-in period.

A table listing the percentage changes in fees for the most common services provided by orthopaedists is on pages 23 and 24. When a service is only provided in one setting and not the other (e.g., out of the office but not in the office) there is an "n/a" denoting it is not provided in that other setting. The table can be found in the Federal Health Policy section of the Academy home page The HCFA proposal can be found in the Federal Register at

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