House bill creates 6 Medicare payment categories

Radiologists and other physicians worry that different conversion factors for different types of physician services could pit doctors against one another.

By David Glendinning, AMNews staff. Sept. 10, 2007.

Washington -- If House lawmakers have their way, the extent to which physicians see their Medicare payment rates rise or fall year by year would depend even more on what types of services they provide.

A provision in the Children's Health and Medicare Protection Act of 2007, which the House passed Aug. 1, would alter the sustainable growth rate formula by establishing six separate categories for physician services. The categories would consist of primary care and preventive services; other evaluation and management services; major procedures; anesthesia services; imaging services; and minor procedures and all other services not falling into another category.

Instead of having a single conversion factor determining final payment amounts for all physician services, the new system would have separate conversion factors for each category. So when Medicare updates its rates at the beginning of a calendar year, for instance, the rate for an office visit might change by a different percentage from the rate for an imaging scan.

Some categories of services could undergo rate increases while others could sustain cuts.

Total allowable growth in each service group would be limited by the gross domestic product, though the primary care and preventive services category would be able to go up an additional 3%. But because each category would have its own spending target, those in which spending growth is deemed too fast would be cut -- much as overall Medicare rates are set to be cut across the board now when physicians exceed their yearly limits.