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Date: Friday, Nov. 15, 1996 FOR IMMEDIATE RELEASE Contact: HCFA Press Office(202) 690-6145
The average fee Medicare pays to physicians for surgical services will decrease 1.6 percent while the average fee for all other services will decrease by 1.8 percent. Overall, the changes announced by HHS will result in an average fee decrease of 0.3 percent.
These fee changes, contained in regulations to be published in the Federal Register on Nov. 22, are primarily the result of a comprehensive five-year review of the Medicare fee schedule required by law. Recommendations received from physicians and the public were considered as part of this review.
Although most of the fee changes are due to the comprehensive review, they also result from the annual updates in the conversion factors used to help set the fees Medicare pays to physicians. Because the 1997 conversion factor updates were not explicitly set by Congress, HHS is required to establish the updates according to a formula set in law.
The conversion factor used in setting fees for surgical services will increase by 1.9 percent, the conversion factor for primary care services will increase by 2.5 percent and the conversion factor for all other physician services will decrease by 0.8 percent.
The starting point of the statutory formula for updating conversion factors is the inflation rate for the costs of operating a medical practice, which for 1997 is projected to be 2 percent. This rate is then adjusted based on how Medicare spending for physician services compares with targets set for that spending. These targets are referred to as the Medicare volume performance standards.
The regulations also set the 1997 spending targets for physician services. These targets allow for a 4.5 percent increase in spending for primary care services, a 3.7 percent decrease in spending for surgical services, and a 0.5 decrease in spending for all other physician services.
Because the 1997 targets were not explicitly set by Congress, HHS is required to establish the targets according to a formula set in law. The formula bases the targets on the estimated inflation rate for physician fees, the projected growth in the number of Medicare beneficiaries, the historic growth in spending for physician services, and any changes in spending due to new laws or regulations.