Medicare's payments for the costs physicians incur in operating their practices are based on two sets of estimates: total practice expenses and resource estimates for individual services. Total practice expense estimates were derived from American Medical Association (AMA) physician surveys, which the Centers for Medicare & Medicaid Services (CMS) refines with supplemental data submitted by medical specialty societies. Resource estimates for individual services were developed by expert panels and refined by CMS with recommendations from another expert panel. In response to a mandate in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, GAO evaluated CMS's processes for updating total practice expense and resource estimates and whether CMS will have the data necessary to update the fee schedule at least every 5 years as mandated by law.
Recommendations for Executive Action
|Centers for Medicare and Medicaid Services||To improve and update the physician fee schedule, the CMS Administrator should consistently assess the accuracy of all supplemental data submissions on total practice expenses, modify the assessment of representativeness such that the data submitted by specialties better reflect the variation in practice expenses within a specialty, and adjust the precision requirement so that supplemental data submissions that would improve the information currently used to set fees are accepted.|
|Centers for Medicare and Medicaid Services||To improve and update the physician fee schedule, the CMS Administrator should base any revisions to the resource estimates for individual services on sufficient data analysis and a documented and transparent rationale.|
|Centers for Medicare and Medicaid Services||To improve and update the physician fee schedule, the CMS Administrator should develop and implement a plan to update the fee schedule in a timely manner with representative data on total practice expenses and the resources for individual services so that the fees appropriately reflect changes in medical services and the costs of their delivery.|