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Eliminating Fees for Overlapping Services Could Save Millions for Medicare

Janice Simmons, for HealthLeaders Media, September 3, 2009

Medicare physician fee schedule payments may be "excessive" for a variety of medical services because efficiencies that occur when two or more services are furnished together are not reflected in the fee schedule, according to the Government Accountability Office (GAO) in a study examining Medicare physician payments and fees. GAO's review found that expanding Medicare's practice in this area could reduce payments by an estimated half billion dollars a year.

Medicare essentially could end up paying twice for those overlapping services, which do not involved surgery or imaging, GAO said. For instance, when two medical services are furnished together, a physician may only review a patient's medical record once, but fees paid would reflect that Medicare paid twice for that activity with both services.

The Centers for Medicare and Medicaid Services (CMS) has implemented what it calls "a multiple procedure payment reduction" (MPPR) policy for various imaging and surgical services when two or more related services are furnished together.

Under this policy, the full fee is paid for the highest priced service and a reduced fee is paid for subsequent services to reflect "efficiencies in overlapping portions of the practice expense component" for instance, clinical labor, supplies, and equipment. This could include, as an example, a nurse's time preparing a patient for a medical procedure or a technician's time setting up the required equipment is incurred only once.

This effort produced savings of about $96 million in 2006 for imaging services, GAO said. However, the scope of the policy is limited because it does not apply to nonsurgical and nonimaging services commonly furnished together. It also does not "specifically reflect efficiencies occurring in the physician work component" the financial value of a physician's time, skill, and effort.

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