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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.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Health Care Financing Administration 1. 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.
Closed - Not Implemented
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.

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