Medical Visits to Medicare Patients

Under a new payment system for physician services, Medicare will pay physicians based on the resources they use to provide care. This new payment system (the Medicare Fee Schedule, or MFS), in addition to changing how much physicians are paid, incorporates new codes and definitions for evaluation and management services. This report investigates how physicians code their medical visits and evaluates alternative coding systems. In particular, it investigates how accurately physicians coded medical visits prior to the MFS, and whether there were incentives for upcoding; and it evaluates the effects of proposed improvements to the coding system. The study also considers how shifts in physicians' coding might affect the Medicare program. The findings suggest that physicians describe their visits with about half of the levels of service available. Policymakers must reach a better understanding of physicians' evaluation of the tradeoffs between increased coding complexity to account for time spent, and possible financial losses resulting from simplified coding.