Reimbursing Physicians Under Medicare on the Basis of Their Specialty

HRD-84-94: Published: Sep 27, 1984. Publicly Released: Sep 27, 1984.

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Federal regulations permit Medicare carriers to allow differences in prevailing reimbursement rates based on differences in charging patterns among various physician specialties. The regulations require carriers to compare charging patterns among physician specialties and justify either single or multiple prevailing rates. In addition, Medicare permits carriers to recognize each physician in the specialty of his choice, regardless of training or certification. GAO studied: (1) the bases for carriers' prevailing rate structures; and (2) the practice of allowing physicians to designate their own specialties.

GAO found that, in some cases, the use of different prevailing rates leads to wide variances in the amount different specialists are paid for similar procedures. GAO also found that: (1) carriers have done little analysis to support their prevailing rate structures; (2) the lack of support for prevailing rate structures came about partially because the Health Care Financing Administration (HCFA), which administers Medicare, has not provided adequate guidance for carriers to use in determining prevailing rates. In addition, GAO found that: (1) about 50 percent of the physicians who self-designated specialties were not board-certified in their designated specialties; and (2) about 25 percent of the physicians who designated internal medicine subspecialties were not board-certified in internal medicine. Many carriers believe that the only alternative to self-designation would be to: (1) require board certification for Medicare specialists; or (2) not recognize specialties under Medicare.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HCFA recognizes the validity of the concerns, but is taking no action because of the possibility of fundamental changes in Medicare's physician payment methodology in the future. GAO believes that this recommendation is valid as long as Medicare uses its current payment method and that the report's findings should be considered in developing an alternative methodology.

    Recommendation: The Administrator of HCFA should establish specific criteria on: (1) what constitutes a specialist for Medicare reimbursement purposes; and (2) how Medicare carriers are to analyze physician charging patterns. The latter should conclude guidance on: (1) the physician specialties and subspecialties that should be compared; (2) the physician procedures that should be compared; (3) how comparisons should be made; and (4) what constitutes a material difference in charging patterns which would justify the establishment of separate prevailing rates.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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