July 1997 Bulletin

HCFA proposes expense rule; orthopaedists get 11% cut

The Health Care Financing Administration (HCFA), which has acknowledged the inadequacy of its data supporting a resource-based practice expense system, published a proposed rule on June 18 and asked Congress to approve legislation to gradually phase-in the implementation schedule.

HCFA published two options. Under Option I, which HCFA prefers, orthopaedic surgeons would get an 11 percent reduction in reimbursements. Under Option II, orthopaedists would get a 5 percent reduction in reimbursements. There is a 60 day period for public comment.

Bruce Vladeck, HCFA administrator, foretold the action at the National Orthopaedic Leadership Conference in May when he said that while the data "is not as complete as we would like it," HCFA had a mandate from Congress to implement the system by Jan. 1, 1998. "I've made it sort of a major touchstone of my tenure at HCFA to be as compliant with those sorts of requests as we can be," Vladeck said. As this was being written there was some effort in Congress to implement a delay or transition period.

The Academy has pointed out that HCFA is not using accurate data to develop the resource-based system and has said HCFA should have a new study to generate accurate cost data from physician practices as Congress originally intended.

Vladeck told the NOLC that "this is not only an area in which it turns out we knew or know a lot less than we thought we did at the time that Congress enacted the legislation, it's an area in which it is extraordinarily difficult to get reliable information on a statistically sound basis."

Under Option I, the reimbursement impact to various specialty groups included:

Dermatology+18%
Rheumatology+15%
Family Practice+12%
General Practice+9%
Otolaryngology+7%
Anesthesiology+4%
Obstetrics/Gynecology +4%
General Surgery-9%
Radiology-9%
Orthopaedic Surgery -11%
Ophthalmology-11%
Cardiology-17%
Gastroenterology-20%
Neurosurgery-21%
Thoracic Surgery-28%
Cardiac Surgery-32%

Also, podiatry, 24 percent increase; optometry, 15 percent increase; and chiropractic, 14 percent increase.


Bruce Vladeck, PhD, administrator of Health Care Financing Administration, says HCFA's resource-based practice expense data is incomplete.


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