Medicare takes AMA advice, proposes E&M pay boost

Primary care physicians say the move would start to address undervalued evaluation and management services. But budget neutrality rules would prompt reimbursement reductions for some specialists.

By David Glendinning, amednews staff. July 17, 2006.

Washington -- Medicare has proposed paying physicians significantly more for some of the most common services they provide, relying heavily on advice from a group convened by the American Medical Association.

In proposed changes to the Medicare physician fee schedule issued late last month, the Centers for Medicare & Medicaid Services announced its intention, starting next year, to boost the amount paid to doctors for the evaluation and management of patients. By reimbursing more based on physicians' increased workload in this area, the agency hopes to better align the payment system with the changing face of modern health care, in which managing complex chronic conditions has become more time-consuming.

"It's time to increase Medicare's payment rates for physicians to spend time with their patients," said CMS Administrator Mark McClellan, MD, PhD. "We expect that improved payments for evaluation and management services will result in better outcomes because physicians will get financial support for giving patients the help they need to manage illnesses more effectively."

CMS proposed changing the rates for a number of services under the fee schedule by altering their physician work component, which is the largest of the three factors that determine what Medicare pays for each service. It covers a doctor's time, skill and training. The practice expense component covers all of the costs involved in running a physician's office, and a third component covers the costs of professional liability insurance. The physician work portion accounts for more than half of the average fee, practice expense makes up about 45%, and insurance constitutes the remainder.

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» Medicare to post prices for common physician services  June 26
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The doctors are in the house
The AMA's House of Delegates is holding its Interim Meeting Nov. 7-10 in Houston, addressing issues such as health system reform and physician payment.
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