Getting rid of payments for Medicare consultations frequently billed by specialists was seen to be connected with a new increase in spending during visits to specialists as well as primary care doctors, suggests a new study examining medicare data published in Archives of Internal Medicine.

Preceding 2010, Medicare costs for consultations were significantly greater than for office visits that were almost identical in terms of difficulty, and were frequently charged by primary care physicians (PCPs). In January of 2010, Medicare got rid of consultation payments from the Part B Physician Fee Schedule and simultaneously increased costs for office visits.

Regarding the budget, these changes would leave it unaffected since it would reduce payments to specialists but increase payments to PCPs.

A research team led by Zirui Song, Ph.D., of Harvard Medical School, Boston, analyzed the relationship of this policy with spending, capacity and coding for office visits during the initial year of the plan going into effect. Zirui and his colleagues investigated outpatient claims from 2007 to 2010 for over 2.2 million Medicare beneficiaries with Medicare Supplemental coverage via sizable employers.

The authors explained:

“Medicare’s elimination of consultations was associated with a 6.5 percent increase in overall spending for outpatient encounters in 2012. This increased spending was explained by higher fees paid for office visits and by increased intensity of coding. Our results suggest that the policy did not achieve its goal of budget neutrality in the first year. However, it did appear to narrow the gap in Medicare payments for office encounters between PCPs and specialists.”

The researchers found that an average of $10.20 extra was spent per beneficiary per quarter on physician meetings after the policy was enacted, however, the total volume of physician visits was unchanged. The rise in spending was accounted for by higher office-visit fees from the policy and a shift in the direction of higher-difficulty visits to trouble PCPs and specialists.

The authors conclude that their examination of Medicare’s termination of consultations bring about possible lessons for policymakers. Volume effects connected with fee decreases depend on the type of service.

The researchers said:

“Finally, the inherent flexibility and subjectivity of code definitions could lead to potentially undesirable coding behavior in response to fee-based policies, as numerous areas in the physician fee schedule feature a gradient of service intensities captured by a set of closely related codes.”

Written by Kelly Fitzgerald