United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2002-02-14 monographic deposited born digital 13 p. GA 1.13:GAO-02-441T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-441T P0b002ee180373172 f:d02441t DGPO 2010-08-12 2011-03-24 GAOREPORTS-GAO-02-441T machine generated eng fdlp REPORT GAOREPORTS-GAO-02-441T GAO-02-441T Beneficiaries Health care cost control Medical fees Medical services rates Payments Physicians Health insurance Health insurance cost control Medicare Economic Index Medicare Program Medicaid Fee-For-Service Program Gross Domestic Product Sustainable Growth Rate System Testimony A02766

Congress implemented a physician fee schedule and a fee update formula to moderate spending growth relative to specified Medicare spending targets. These spending targets increase annually to account for growth in the costs of providing physician services, the growth in the overall economy, and changes in the number of Medicare beneficiaries. Physician fees are adjusted for changes in the costs of providing services and on actual cumulative spending compares to the cumulative targets. Physician fees are updated to reflect increased costs of providing services with the updates adjusted up or down on actual spending either falling below or exceeding the targets. In November 2001, the Centers for Medicare and Medicaid announced that updating Medicare's fees will decline 5.4 percent from what was paid in 2001, despite an estimated 2.6 percent increase in the cost of physician inputs. This reduction accounts for historical cumulative spending that exceeded the target by $8.9 billion, or 13 percent of estimated 2002 spending. Several factors contributed to the disparity between actual and targeted spending, including the correction of substantial errors in past spending estimates and the revision of targets for prior years. The current update mechanism could be modified to moderate fluctuations in physician fees and to ensure adequate payments, while retaining the fiscal discipline created by having a spending target. Such modifications would need to balance concerns about preserving fiscal discipline on physician spending with the need to maintain adequate payment rates to ensure that beneficiaries have access to physician services. Because the paramount consideration in setting payment rates is ensuring appropriate beneficiary access to services, timely and detailed data on Medicare beneficiary service use are essential to achieving this balance. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-441T/html/GAOREPORTS-GAO-02-441T.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-441T/pdf/GAOREPORTS-GAO-02-441T.pdf GAO-02-441T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-441T Testimony GAO-02-441T; Medicare Physician Payments: Spending Targets Encourage Fiscal Discipline, Modifications Could Stabilize Fees; Beneficiaries Health care cost control Medical fees Medical services rates Payments Physicians Health insurance Health insurance cost control Medicare Economic Index Medicare Program Medicaid Fee-For-Service Program Gross Domestic Product Sustainable Growth Rate System Title 42 Section 1395W4 42 U.S.C. 1395W4 Volume 11 Page 251 11 Stat. 251 Volume 113 Page 1501 113 Stat. 1501 Public Law 105-33 Public Law 106-113