WASHINGTON – The Congressional Budget Office has issued a Medicare spending report that provides new insight to the relationship between physician compensation levels and patient volume.
In a background paper titled “Factors Underlying the Growth in Medicare’s Spending for Physicians’ Services,” CBO said the growth in Medicare expenditures for physician reimbursement is more directly related to the volume and acuity of patient cases than to changes to the Medicare payment methodology.
The volume and intensity of physician services covered by the public program are projected to increase by about 4 percent annually.
This finding suggests that physicians aren’t “gaming” Medicare reimbursements, but are in fact dealing with greater loads of patients or more severe cases for services covered by Medicare.
Between 1997 – the year in which the Sustainable Growth Rate was first used to calculate reimbursements – and 2005, the conversion factor used to determine changes in pay rates has declined by 14 percent despite a 3.8 percent per-beneficiary increase in Medicare expenditures, the paper said.
Additionally, the report found that the 39 percent increase in physicians’ Medicare patient volume during the past 10 years has been largely affected by medical practice changes, and not changes to payment rates.
The report noted payment rate changes could affect expenditures through a behavioral response on the part of physicians – doctors tend to increase patient volume when pay rates drop, and vice versa. A 28 percent change in volume inversely proportionate to pay changes is suggested by the data, the report found.
“One could conclude that a lot of what is driving the volume of physician service is out of their control,” said Kent Moore, manager of healthcare financing and delivery systems for the American Academy of Family Physicians.