Local Physicians Oppose Fee Schedule Set by Non-Doctors / Others Claim It Could Revolutionize Medicine

Article excerpt

Oklahoma health policy experts polled by The Journal Record took issue with a proposed federal fee schedule forphysician services to Medicare patients, claiming fee schedules set by people working outside the health industry would be ineffective and damaging.

Others, however, claim such a schedule could return the laws of supply and demand to physicians' fees, thereby bringing greater efficiency and ultimately better health care.

The Department of Health and Human Services is drafting a report to Congress that recommends a fee schedule which would set standard payments for 6,000 procedures performed by doctors, the New YorkTimes News Service has reported.

The fee schedule would be based either on historical data showing how much doctors have charged for the services, or how much Medicare has paid. It would replace a freeze set in June which limits fees for physicians services to all Medicare beneficiaries.

Officials at the Federal Health Care Financing Administration, which operates the Medicare program, said they would like to see the fee schedule take effect in October 1986. However, they said thatthe report was still being revised and that the recommendations were subject to approval by Margaret M. Heckler, the secretary of health and human services, and by the Domestic Policy Council, whichconsists of eight Cabinet officers.

If a fee schedule is made mandatory, one based on how much doctors have charged for their services, rather than what Medicare pays, would be more acceptable to physicians and less harmful to patients, according to Dr. William Coleman, secretary/treasurer of the Oklahoma County Medical Society.

Under the current freeze, Medicare intially sets a fee it deems acceptable - usually about 60 percent to 65 percent of the customary charge - based on fees submitted in 1982, said Coleman. Medicarethen pays 80 percent of that fee.

If the physician charges $800 for a particular surgical procedure, therefore, the acceptable fee may be set at $500 and Medicare would pay 80 percent of the $500.

Dr. Warren Felton, president of the Oklahoma County Medical Society said a fee schedule could be an appropriate method of payment, depending on "the rate of fees established and who would be involved in determining the fee schedule.

"If it were made by people who don't practice medicine, it would not be practical," he said.

The Department of Health and Human Services report also suggests research to test two other ways of paying doctors.

- One, known as capitation, involves a single yearly payment to a group of doctors who agree to provide all necessary services to a Medicare beneficiary.

- Under the other system, the government would pay a flat sum, set in advance, depending on the diagnosis of the patient's ailment. Each patient would be classified in one of 468 ""diagnosis-related groups,'' and Medicare would pay doctors the same amount for each patient in each group.

Felton said capitation and the fixed sum proposal "would be very difficult to accomplish in a satisfactory way."

Medicare payments to hospitals are currently set up on a fixed sum, or diagnosis related group (DRG) payments. The proposed changes would involve "reorganizing the entire pattern of medical care,"Felton said.

Don Alexander, partner in the Oklahoma City office of the accounting firm of Ernst & Whinney, said a fixed price for physicians would not be dissimilar to what has already occurred in hospitals. It's effect, he said, would be revolutionary.

The DRG payment system, he said, introduces risk for price at hospitals where they get paid a fixed amount for each patient regardless of costs, as contrasted to reimbursement for care.

The new payment system has resulted in mergers, formation of minor emergency centers and other facilities where service can be provided less expensively on an outpatient basis. …