Impact of the Medicare Fee Schedule on an Academic Department of Medicine
Published in: JAMA, The Journal of the American Medical Association, v. 266, no. 21, Dec. 4, 1991, p. 3000-3003
Posted on RAND.org on December 31, 1990
The objective of this study was to examine the effect of the Medicare Fee Schedule (MFS) on Medicare revenues in the department of medicine at an urban academic medical center after the MFS is fully implemented. Department revenues from Medicare were compared with projected revenues using the MFS proposed by the Health Care Financing Administration on June 5, 1991. National Medicare claims data were used to determine differences in service mix between community and academic internists and the impact of the geographic component of the MFS on department revenues. Results indicate that department revenues from Medicare in 1996 are projected to be 25.5% lower under the MFS than if the current system had continued. Subspecialty sections that perform large numbers of procedures and special tests had the largest decrease in revenues (e.g., gastroenterology, -29.8%); however, this did not differ greatly from decreases in sections that mainly provide visits and consultations (e.g., general internal medicine, -24.7%). The authors conclude that the proposed MFS is projected to lead to substantial reductions in department revenues from Medicare. While relative values for services and geographic location will play a role in how individual departments fare under the MFS, the value of the conversion factor used in the final MFS will be the factor of greatest importance.